Investment Climate A Report on Northern States of India

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2 Investment Climate A Report on Northern States of India

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4 Contents Introduction 1 Chapter 1 : Economic Profile of the States 2 Chapter 2 : State Industrial Profiles 17 Chapter 3 : Land Availability 26 Chapter 4 : Ease of Doing Business in the States 40 Chapter 5 : Labour Regulations and Industrial Relations 54 Chapter 6 : State Taxes 63 Chapter 7: State Government Policies and Incentive Schemes for Industry 68 Chapter 8: Physical Infrastructure 81 Chapter 9: New Industrial Investments 99 Investment Climate - A Report on Northern States of India

5 INTRODUCTION The quantum and quality of investment flowing into a country or any of its regions depends upon the returns that the investors expect and also hinges upon the uncertainties around these returns. Hence, the necessity to study the investment climate of a country/region/state which has significant bearing on its ability to attract investment. Investment climate is shaped by several factors. These factors play a crucial role in shaping investor decisions. It is important to determine and assess these factors to gauge the region's prospective attractiveness or the lack of it, as a potential investment destination. Overall macro issues relating to economic and political stability, fiscal, monetary and economic policies and governance issues play an important role in this context. While most of these macro indicators are applicable for assessing the investment climate of a country, issues concerning political stability, governance, certain fiscal issues are equally important indicators impacting investment climate of the states in India. While such analysis allows scope to focus on critical issues which shape business environment, it also helps to draw attention to areas which need prioritization and reform. Objective and Structure of the Report The report's objective is to study the investment climate of the Northern states of India viz. Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh and Uttarakhand. The report is structured along the following lines Chapter 1 gives a brief economic profile of the states and the industrial profile of the states is discussed in Chapter 2 to set the context of the study. The focus of the study thereafter shifts to parameters which shape the investment climate of the states, and to assess how the states fare against each of these parameters. Chapter 3 dwells on the issue of land availability in the states. The chapter showcases the efforts of the individual State Industrial Development Corporations in allocating land for industrial use, the state governments' initiatives in establishing industrial parks/clusters and the status of SEZs in the respective states. The issue of efficacy of the state's regulatory framework is another major component influencing investment decisions. These relate to procedures for entry or starting of business for firms, ease of operations, exit procedures, labour relations and flexibility in labour use, fiscal viability etc. The next three chapters focus attention on these aspects. The ease of doing business, relating to procedures and timelines required for setting up business units and investment facilitating measures in the respective states, are discussed in Chapter 4. Issues relating to labour regulations and labour scenario are discussed in Chapter 5. Chapter 6 dwells on state taxes. Chapter 7 discusses state governments incentive schemes for industry. Chapter 8 focuses on infrastructure development in the states. Under the purview of physical Infrastructure, the chapter includes power supply, roads, railways and airports. Given that the above parameters shape investment considerations, it will be interesting to review the status of investment flows to these states over the past few years. Chapter 9 gives a brief on new industrial investments which have been committed in the states. 1 Investment Climate - A Report on Northern States of India

6 Chapter 1 ECONOMIC PROFILE OF THE STATES CHANDIGARH Chandigarh is located on the fringes of the Shivalik range. The area falls under the Indo-Gangetic Plain a few miles south of the Shivalik Hills and between two seasonal hill torrents, the Sukhna Choe and the Patiali Rao. The land is a flat, fertile tract of alluvial soils. It covers an area of approximately 114 square kms and shares common boundaries with the states of Haryana in the South and East, and Punjab in the North and West. Chandigarh at a Glance Total area (Sq. km) 114 Total Population (Census 2001) 9,00,635 Male 5,06,938 Female 3,93,697 Percentage of Urban Population 89.8 Density of Population (per sq. km) 7,900 Literacy Rate 81.9 Percentage share in India s GDP ( ) 0.3 GSDP The Gross State Domestic Product (GSDP) for the UT at constant prices ( ) stood at Rs 10,693 Crore in as against Rs 4,141 Crore, in , a CAGR of 11.1%. Corresponding growth rates in primary, secondary and tertiary sectors were 0.5%, 12.1% and 11.0% respectively. GSDP- Growth & Size Rs Crore in% GSDP (LHS) YoY growth rates (RHS) Source: CSO Investment Climate - A Report on Northern States of India 2

7 The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO The growth rate for the trade, hotels and restaurants has been highest for the UT amongst all states/uts. The construction sector has witnessed the second highest growth rate in the region, after Uttarakhand and the third highest in the country. These high growth rates have resulted in Chandigarh being the fastest growing economy in the Northern region. Fastest Growing Sectors in Chandigarh Sectors CAGR ( to ) Chandigarh Northern Region Banking & insurance Construction Trade, hotel and restaurants Transport, storage and communication Source: CSO DELHI Situated on the banks of river Yamuna, Delhi is located in the Northern part of India. Considered to be a part of the Aravalli range, major part of Delhi is a plain area or Bhangar which is very fertile. The plains can be divided into Delhi, New Delhi and Delhi Cantonment. The other regions of Delhi namely the Yamuna plains are flood-prone while the ridge which is the most dominating feature in this region is surrounded by the Aravallis. Delhi comprises of 200 villages which are heavily populated. Uttar Pradesh and Haryana are two neighbors of Delhi. They have a strong influence on the culture and lifestyle of the people of Delhi. Yamuna is an important river in Delhi which fertilizes the alluvial soil. 3 Investment Climate - A Report on Northern States of India

8 Delhi at a Glance Total area (Sq. km) 1,483 Total Population (Census 2001) 1,38,50,507 Male 76,07,234 Female 62,43,273 Percentage of Urban Population Density of Population (per sq. km) 9,340 Literacy Rate Percentage share in India s GDP 3.6 GSDP GSDP for the state stood at Rs 120,694 Crore in as against Rs 55,220 Crore in , a CAGR of 9.1%. Corresponding, growth rates in primary, secondary and tertiary sectors were -0.9%, 7.3% and 9.6% respectively. GSDP- Growth & Size Source: CSO The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO Investment Climate - A Report on Northern States of India 4

9 Delhi has emerged as one of the leading economies in the region and is currently the third largest in the region. The growth rates for the fastest growing sectors are also higher than the regional averages except in construction and banking and insurance sub-sectors. Fastest Growing Sectors in Delhi Sectors CAGR ( to ) Delhi Northern Region Transport, storage and communication Trade, hotels and restaurants Construction Real estate, ownership of dwellings & business services Banking and Insurance Source: CSO HARYANA The state of Haryana is bounded by Uttar Pradesh in the East, Punjab in the West, Himachal Pradesh in the North and Rajasthan in the South. Haryana surrounds Delhi from three sides. The South-west of the Haryana is dry sandy and barren. There are some high ridges running from the North-west to South-east with numerous spurs branching out in all directions. These hills are known as the Morni and Tipra ranges. They belong to the outer ranges of the Himalayas. Haryana at a Glance Total area (Sq km) 21 districts, 119 blocks and 6955 villages 44,212 Capital Chandigarh Total Population (No.) 21,144,564 Male 11,363,953 Female 9,780,611 Percentage of Urban Population 28.9 Density of Population (per sq km) 478 Literacy Rate Percentage share in India s GDP 3.3 GSDP The Gross State Domestic Product (GSDP) for the state; stood at Rs 1,11,420 Crore in as against Rs 51,375 Crore, in , a CAGR of 9.0%. Corresponding growth rates in primary, secondary and tertiary sectors were 3.3%, 9.1% and 12.2% respectively. 5 Investment Climate - A Report on Northern States of India

10 GSDP - Growth & Size Source: CSO The sectoral composition of GSDP for and is given below. An interesting trend for the state has been the gradual decline in the contribution of agriculture and allied services to GSDP and the increasing importance of the services sector in the economy. Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO Service sector is playing a vital role in the growth of Haryana's economy. The real estate sector in the state witnessed the highest growth in the region. The fastest growing sectors in the state, contributes significantly to the state's GDP 69.4%. Investment Climate - A Report on Northern States of India 6

11 Fastest Growing Sectors in Haryana Sectors CAGR ( to ) Haryana Northern Region Construction Trade, hotels and restaurants Transport, storage & communication Real estate, ownership of dwellings & business services Banking and insurance Source: CSO HIMACHAL PRADESH Himachal Pradesh is a beautiful state located in the Northern part of India. Himachal Pradesh was granted the status of a state on 25 January The land is dominated by the great Himalayas in the North-east and marked with lower ridges of the Shivalik ranges in the South-east. This Abode of Snow covers a total area of 55,673 sq. km and shares common borders with Jammu & Kashmir on North, Punjab on West and South-west, Haryana on South, Uttar Pradesh on South-east and China on the East. Himachal Pradesh at a Glance Total area (Sq. km) 12 districts, 49 towns and 17,495 villages 55,637 Capital Shimla Total Population (No.) 60,70,900 Male 30,87,940 Female 29,89,960 Percentage of Urban Population 9.7 Density of Population (per sq. km) 109 Literacy Rate 76.5 Percentage share in India s GDP 0.8 GSDP The Gross State Domestic Product (GSDP) for the state stood at Rs 26,646 Crore in , as against Rs 14,113 Crore in , a CAGR of 7.3%. Corresponding, growth rates in primary, secondary and tertiary sectors were 4.8%, 9.1% and 6.9% respectively. GSDP - Growth & Size Source: CSO 7 Investment Climate - A Report on Northern States of India

12 The sectoral composition of GSDP for and is given below. The sectoral composition of GSDP reflects the predominant role of the secondary sector followed by the service sector. Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO Himachal Pradesh is also known as fruit bowl of India. For the period to , the agriculture sub sector in Himachal has witnessed the second highest growth rate after Rajasthan in the Northern region. The growth in the state is broad based with important sub sectors across all the three sectors of the economy witnessing significant growth rates. Fastest growing sectors in Himachal Pradesh Sectors CAGR ( to ) HP Northern Region Construction Electricity, gas and water supply Transport, storage & communication Banking & insurance Source: CSO JAMMU & KASHMIR Strategically located Jammu and Kashmir is at the Northern most extremity of India. The total area of the state is 22,22,236 sq. kms The state is bounded by Pakistan, Afghanistan and China from the West to the East. Jammu & Kashmir at a Glance Total area (Sq. km) 14 districts, 54 towns and 6477 inhabited villages 22,22,236 Capital Summer - Srinagar Winter - Jammu Total Population (No.) 101,43,700 Male 53,60,926 Female 47,82,774 Percentage of Urban Population Density of Population (per sq. km) 99 Literacy Rate 55.5 Percentage share in India s GDP 0.7 Investment Climate - A Report on Northern States of India 8

13 GSDP The Gross State Domestic Product for the state stood Rs 23,061 Crore in , as against Rs 15,660 Crore in , a CAGR of 5.0%. Corresponding, growth rates in primary, secondary and tertiary sectors were 2.9%, 7.4% and 5.0% respectively. GSDP - Growth & Size Source: CSO The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO Construction sub sector which contributes the second highest to the state GDP, after agriculture, is also one of the fastest growing sectors for the state. Manufacturing, another important sub sector, has witnessed has outperformed the regional average. Fastest Growing Sectors in Jammu & Kashmir Sectors CAGR ( to ) J&K Northern Region Banking & insurance Construction Manufacturing Transport, storage and communication Source: CSO 9 Investment Climate - A Report on Northern States of India

14 PUNJAB Punjab is situated in the North-west of India, it is bordered by Pakistan on the West, the Indian states of Jammu and Kashmir on the North, Himachal Pradesh on its North-east and Haryana and Rajasthan to its South. Punjab at a Glance Total area (Sq. km) 20 districts, 143 towns and inhabited villages 50,362 Capital Chandigarh Total Population (No.) 2,43,59,296 Male 1,29,85,045 Female 1,13,73,954 Percentage of Urban Population Density of Population (per sq. km) 482 Literacy Rate Percentage share in India s GDP 3.1 GSDP The Gross State Domestic Product for the state stood at Rs 103,826 crore in , as against Rs 67,162 Crore in , a CAGR of 5%. Corresponding, growth rates in primary, secondary and tertiary sector were 2.3%, 6.6% and 6.1% respectively. GSDP-Growth & Size Source: CSO Investment Climate - A Report on Northern States of India 10

15 The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO The three largest sub sectors for Punjab's economy, in terms of percentage contribution to the state GDP, are agriculture, manufacturing and trade, hotels & restaurants accounting for 56.9% of the state GDP. However, none of these figure in the list of the top three fastest growing sectors for the state, explaining the relatively slow growth rate witnessed by the state. Fastest Growing Sectors in Punjab Sectors CAGR ( to ) Punjab Northern Region Banking & insurance Construction Transport, storage and communication Source: CSO RAJASTHAN Rajasthan is located in the North-western part of the subcontinent. It is bounded on the West and North-west by Pakistan, on the North and North-east by the states of Punjab, Haryana, and Uttar Pradesh, on the East and Southeast by the states of Uttar Pradesh and Madhya Pradesh, and on the South-west by the state of Gujarat. The state has an area of 3,42,239 square kilometers. Rajasthan at a Glance Total area (Sq. km) 3,42, districts, 222 towns and villages Capital Jaipur Total Population (No.) 5,65,07,188 Male 2,94,20,011 Female 2,70,87,177 Percentage of Urban Population Density of Population (per sq. km) 165 Literacy Rate Percentage share in India s GDP Investment Climate - A Report on Northern States of India

16 GSDP GSDP for the state stood at Rs 1,44,568 Crore in as against Rs 82,720 Crore in , a CAGR of 6.4%. Corresponding, growth rates in primary, secondary and tertiary sectors were 4.8%, 6.3% and 7.5% respectively. GSDP - Growth & Size Source: CSO The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO Trade, hotels and restaurants sub sector contributes about 13.1% and is the second highest contributor to the state GDP, after agriculture. Transport, storage and communication, another important sub sector, has witnessed the highest growth in the region. Investment Climate - A Report on Northern States of India 12

17 Fastest Growing Sectors in Rajasthan Sectors CAGR ( to ) Rajasthan Northern Region Banking & insurance Construction Transport, storage and communication Source: CSO UTTAR PRADESH Uttar Pradesh is surrounded by Bihar in the East, Madhya Pradesh in the South, Rajasthan, Delhi, Himachal Pradesh and Haryana in the West and Uttaranchal in the North and Nepal touch the Northern borders of Uttar Pradesh, it assumes strategic importance for Indian defence. Uttar Pradesh at a Glance Total area (Sq. km) 71 districts, 660 towns and 97,942 inhabited villages 2,36,286 Capital Lucknow Total Population (No.) 16,61,97,921 Male 8,75,65,369 Female 7,86,32,552 Percentage of Urban Population Density of Population (per sq. km) 689 Literacy Rate Per Capita NSDP ( ) 11,939 Percentage share in India s GDP 8.3 The Gross State Domestic Product for the state stood at Rs 2,76,677 Crore in , as against Rs 1,75,159 Crore in , a CAGR of 5.2%. Corresponding, growth rates in primary, secondary and tertiary sectors were 2.4%, 7.5% and 6.1% respectively. GSDP - Growth & Size Source: CSO 13 Investment Climate - A Report on Northern States of India

18 The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO The three fastest growing sectors of the state's economy contribute only about 24.9% to the state GDP. Fastest growing sectors in Uttar Pradesh Sectors CAGR ( to ) Uttar Pradesh Northern Region Banking & insurance Construction Transport, storage and communication Source: CSO UTTARAKHAND th Uttarakhand is the 27 state of the Republic of India and was carved out of Uttar Pradesh on 9th Nov The state is bordering Himachal Pradesh in the North-west and Uttar Pradesh in the South and has international borders with Nepal and China. Uttarakhand at a Glance Total area (Sq. km) 13 districts, 13 towns and 15761inhabited villages Capital Dehradun Total Population (Census 2001) 84,89,000 Male 43,26,000 Female 41,63,000 Percentage of Urban Population 25 Density of Population (per sq. km) 159 Literacy Rate 71.6 Percentage share in India s GDP 0.8 Investment Climate - A Report on Northern States of India 14

19 GSDP GSDP for the state stood at Rs 27,516 Crore in as against Rs 12,621 Crore in , a CAGR of 9.0%. Corresponding, growth rates in primary, secondary and tertiary sectors were 2.6%, 16.3% and 8.5% respectively. GSDP - Growth & Size Rs Crore Source: CSO The sectoral composition of GSDP for and is shown below Sectoral Composition of GSDP Primary Secondary Tertiary Source: CSO 15 Investment Climate - A Report on Northern States of India

20 The state has witnessed phenomenal growth in the manufacturing and construction sectors, clocking highest growth rates in the region, in the respective sub sector category. Fastest Growing Sectors in Uttarakhand Sectors CAGR ( to ) Uttarakhand Northern Region Construction Electricity, gas and water supply Manufacturing Transport, storage and communication Banking and insurance Source: CSO Observations and Conclusions Northern region is the largest contributor to the national GDP despite its declining share, from 28.1% in to 27.6% in The economic growth in the region has underperformed the national average. The CAGR of the region from to is 6.6% as against 7.2% nationally. Transport, storage & communication, and construction sub sectors are amongst the fastest growing sectors in the region. Jointly these sub sectors contribute 19.7% to the regional GDP and are amongst the top five contributors. The largest economies in the region are Uttar Pradesh, Rajasthan and Delhi. The fastest growing economies in the region are Chandigarh, Delhi, Uttarakhand and Haryana. Some of the sub sectors at the state level have clocked high growth rates nationally. Chandigarh-trade, hotels & restaurants witnessed highest growth rate in the country; Delhi- real estate witnessed fourth highest growth rate nationally; Haryana-real estate witnessed highest growth rate in the country; Himachal Pradesh witnessed the fourth highest growth rate in agriculture amongst all states and UTs; Uttarakhand clocked the third highest growth rate in construction and third highest in manufacturing. Investment Climate - A Report on Northern States of India 16

21 As per the ASI data, Uttar Pradesh was the highest contributor to the Industrial output amongst the Northern states, contributing 6.1% in value of output by deploying 5.9% of fixed capital and 12.9% of productive capital, followed by Haryana (4.4%). Uttarakhand is the highest contributor in terms net value added, 5.4%, followed by Haryana, 3.9%. INDICATORS Chandigarh Delhi Haryana Industrial indicators (Value figures in Rs Lakhs & others in numbers) Himachal Pradesh Chapter 2 STATE INDUSTRIAL PROFILES Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand NR India 1. Number of Factories 278 3,026 4,450 (0.18) (1.95) (2.87) 1,294 (0.83) 649 (0.42) 10,065 (6.48) 6,352 (4.09) 10,935 (7.04) 1,907 (1.23) 38,956 1,55,321 (25.08) 2. Fixed Capital 3. Working Capital 4. Invested Capital 5. No. of workers 6. Value of Output 7. Depreciation 8. Net Value Added 9. Net Fixed Capital Formation 10. Gross Fixed Capital Formation 11. Gross Capital Formation 69,003 3,12,873 3,70, ,89,156 2,43,669 26,48,036 34,69,297 62,67,696 21,89,841 2,10,96,028 10,55,96,614 (0.07) (0.30) (3.51) (2.07) (0.23) (2.51) (3.29) (5.94) (2.07) (19.98) 41,922 3,28,715 8,70,395 7,87,994 2,16,779 7,18,655 8,50,790 40,13,077 11,20,320 89,48,647 3,11,23,298 (0.13) (0.11) (2.80) (2.53) (0.70) (2.31) (2.73) (12.89) (3.60) (28.75) 1,11,002 7,40,846 61,33,423 28,74,252 3,98,911 46,12,258 4,66,3623 9,42, ,69,272 3,24,26,765 15,35,17,773 (0.72) (4.83) (39.95) (18.72) (2.60) (30.04) (30.38) (61.38) (22.60) (21.12) 7,068 87,552 3,77,322 84,497 45,033 4,31,568 2,75,950 5,74,874 1,72,861 20,56,725 87,76,745 (0.08) (1.00) (4.30) (0.96) (0.51) (4.92) (3.14) (6.55) (1.97) (23.43) 3,52,625 27,47,594 1,44,33,596 42,27,948 13,49,375 1,05,51,352 90,66,470 2,00,46,266 82,92,360 7,10,67,586 32,72,79,786 (0.11) (0.84) (4.41) (1.29) (0.41) (3.22) (2.77) (6.13) (2.53) (21.71) 5,347 34,426 3,81,016 1,31,543 18,707 2,28,839 2,59,319 5,35,619 1,54,164 17,48,980 83,54,590 (0.06) (0.41) (4.56) (1.57) (0.22) (2.74) (3.10) (6.41) (1.85) (20.93) 44,150 34,758 20,35,386 13,33,237 3,20,759 1,25,640 1,68,436 24,138 28,43,285 69,29,789 5,27,76,558 (0.08) (0.07) (3.86) (2.53) (0.61) (0.24) (0.32) (0.05) (5.39) (13.13) 9,996 25,914 4,85,903 48,397 32,604 3,52,463 8,18,117 5,56,914 5,19,449 28,49,757 1,42,40,111 (0.07) (0.18) (3.41) (0.34) (0.23) (2.48) (5.75) (3.91) (3.65) (20.01) 15,343 60,340 8,66,919 1,79,940 51,311 5,81,302 10,77,436 10,92,533 6,73,613 45,98,737 2,25,94,701 (0.07) (0.27) (3.84) (0.80) (0.23) (2.57) (4.77) (4.84) (2.98) (20.35) 12,804 99,647 10,85,053 3,33, ,48 5,57,573 12,01,318 1,13,343 10,23,829 44,82,304 2,61,58,544 (0.05) (0.38) (4.15) (1.28) (0.21) (2.13) (4.59) (0.43) (3.91) (17.14) 12. Profits 12,137 11,359 9,06,075 10,82,024 2,48,647 4,33,485 10,75,223 10,33,227 21,61,819 69,63,996 2,96,99,112 (0.04) (0.04) (3.05) (3.64) (0.84) (1.46) (3.62) (3.48) (7.28) (23.45) Note: Figures in bracket indicate percentage comparison with India Source: ASI The contribution of the Northern region to total output stands at 21.7%, rather low as compared to its size. The number of factories stands at 25.1% and invested capital at 21.1%. The individual state industrial profiles are detailed on subsequent pages. 17 Investment Climate - A Report on Northern States of India

22 CHANDIGARH As on date, Chandigarh has over 2,950 small scale units and around 15 medium and large scale industrial units. Among the small scale units, 40% are ancillary units producing components for the tractor industry. Light engineering industry, electrical/electronic items, machine tools, plastic goods, IT/ITES and tourism are the other key industries. Large, Medium and Small Scale Industries Working Small Scale Industries Year No of Units Fixed Capital Employees Production (Rs in Crores) (Numbers) (Rs in Crores) , ,938 1, , ,223 1, , ,683 1,429 Working Large/Medium Industries Year No of Units Fixed Capital Employees Production (Rs in Crores) (Numbers) (Rs in Crores) , , , Source: Statistical abstract of Chandigarh, 2008 DELHI The industrial sector plays a vital role in the economic development of the NCT of Delhi. The manufacturing sector contributes about 7.2% (in ) in the state Gross Domestic Product (GDP). Delhi has emerged as a key destination for the service industry, viz banking and financial service institutions, IT/ITES, and other knowledgebased industries. It is one of the important tourist destinations of the country and is a prominent agri-trade centre. The other important industries in the national capital are construction and engineering, real estate, small scale industries including textiles, handlooms, printing and publishing. However, due to ban on the non-conforming industrial units and other environment safety norms, there was no significant increase in the number of registered factories in NCT of Delhi during the last decade ( ). Number of the working factories increased to 6,892 during 2008 from 6,855 during ,682 (about 97%) working factories were under private sector and 189 were under public sector during Registered Factories in Delhi under the Factories Act Year Private Government U/s 85 of Factories Act, Total , , , , , , , , , , , , , , , , , , , ,892 Source: Economic Survey of Delhi, Investment Climate - A Report on Northern States of India 18

23 HARYANA Haryana has shown robust industrial performance over the years. The key industries in the state include automobiles and automotive components, readymade garments and real estate, IT/ITES, textiles, bicycle, sanitary-ware, scientific instrument industries and agro-based industries. The major industrial centres in Haryana are Gurgaon, Panipat, Rewari, Ambala and Faridabad. Gurgaon is the most developed commercial and business centre of Haryana, located on the outskirts of Delhi. The industrial areas around Gurgaon house most of the automobile and auto component manufacturers based in the state. Gurgaon also has a number of garment export units. During the last 4-5 years, Gurgaon has emerged as an important location for the Information Technology (IT) and the Information Technology Enabled Services (ITES) industry. In real estate sector, there has been significant growth during the last decade. The main industries in Faridabad are light engineering goods, metal goods and automotive components. Panipat is known for its handloom industry and is also the biggest centre in the country for producing shoddy yarn and lowpriced blankets. Panipat has also emerged as key petro chemical hub of the region. The other industrial towns of Haryana are Karnal and Ambala. Karnal is well established centre for agro-based industry. Ambala has industrial units in the areas of scientific and surgical instruments, electronics and light engineering sectors. Sonepat is known for its agro-based and bicycle industry. Small, Medium & Large Enterprises Small Scale Units Number 98,996 74,128 72,467 Output (Value) in Crore 2,970 2,866 1,781 Large and Medium Units Number 447 1,086 10,199 Output (Value) in Crore 3,890 34,450 45,574 Registered Working Factories 4,843 8,631 9,636 Workers Employed in Registered Working Factories ( 000) Source: Statistical Abstract of Haryana, HIMACHAL PRADESH The industrial scenario of Himachal Pradesh changed significantly after the announcement of Concessional Industrial Package 2003 by the government of India. The state has emerged as one of the favorite investment destinations in pharmaceutical industry. The other important industries of the state are textiles, FMCG, light engineering goods, auto components, IT and electronics, cement, tourism industry. Moreover, Himachal Pradesh has always been a key destination for investments in food procurement and food processing industry, hydroelectric power and horticulture industry, owing to its rich natural resources. However, the industrial development in the state has been uneven. The periphery districts of Solan, Sirmaur, Kangra, Una and Bilaspur are the industrially developed districts and have around 60% of the total industrial units and 95% of the industrial investments in the state. The inner districts of Chamba, Hamirpur, Kullu, Kinnaur, Lahaul and Spiti, Mandi and Shimla have been categorised as industrially backward districts and account for the remaining industrial growth. 19 Investment Climate - A Report on Northern States of India

24 Baddi is a leading industrial centre of Himachal Pradesh and is part of the industrial corridor stretching from Barotiwala to Nalagarh. Kala Amb in Poanta Sahib has many steel fabrication mills. Parwanoo (Solan district) has many auto components units whereas Una has plant of International Cars and Motor Ltd. Cement plants in the state are mainly based at Bilaspur, Mandi and Nalagarh. Status of Micro, Small, Medium & Large Enterprises (as on ) District No of units Investment Employment (Rs in Lakhs) Bilaspur 2,239 52,761 9,771 Chamba 1,733 2,850 6,015 Hamirpur 2,718 6,103 9,832 Kangra 8,761 29,615 39,372 Kullu 2,438 7,067 12,822 Kinnaur ,762 Lahaul& Spiti ,575 Mandi 3,727 9,905 15,386 Shimla 3,317 23,597 12,819 Solan 4,574 6,94,119 88,610 Sirmour 3,065 1,36,677 25,695 Una 3,139 77,340 18,004 Total 36,845 10,40,842 2,41,663 Source: Department of Industries, HP Government JAMMU & KASHMIR Agriculture, the predominant sector of the economy, supports about 80% of the state's population. The horticulture and floriculture industries in Kashmir are the bulwark of the rural economy in the state providing jobs to thousands of people directly and indirectly. The state leads in terms of production of apples, walnuts, pears, saffron, almonds and apricots, and has a huge potential for export of processed food and allied services. Other important industries in the state are handlooms and handicrafts, mineral-based industry, sericulture drugs & chemicals, and leather industry. The state also has large deposits of limestone, gypsum, bauxite, marble, magnesite, dolomite, lignite, quartzite and coal. Moreover, IT industry has tremendous potential in the state. Jammu, famous for its temples and Kashmir, for its scenic beauty, makes tourism a prominent industry in the state. Moreover, Kashmir has a prominent handloom and handicrafts industry. Srinagar is the centre of traditional silkweaving industry and dry fruits. Jammu & Kashmir has made significant progress in the establishment of industrial units. As per annual survey of Industries , there were 649 factories in the state, giving employment to 45,033 workers and generating a net income of Rs 2,949 Crore. According to the 4th MSME Census, as on 31st March 2007, the total number of MSME units in the state stands at 2,61,337 constituting of 65,767 units in manufacturing and 1,95,570 units in service sector. Investment Climate - A Report on Northern States of India 20

25 Medium Scale Industries in Public Sector Years Production No. of units Employment (Rs in Lakhs) , , , , , , , , , , , ,135 Source: Directorate of Economics and Statistics, Government of Jammu and Kashmir Number of Working Enterprises ( ) Distribution % distribution Parameters Registered Unregistered Total Registered Unregistered Total Manufacturing 10,989 54,778 65, Services 3,545 1,92,025 1,95, Total 14,534 2,46,803 2,61, Source: 4th All India MSME Census PUNJAB Industrial development in Punjab has taken place in phases. In the 1950s, the bicycle-parts and hosiery industries took roots, while in the 1960s with the 'Green Revolution', agriculture-based industries like farm machinery manufacturing came up. The main focus in the 1970s was on industries like auto-parts and electronic items and during the 1980s the focus was on resource-based industries like food processing, edible and non-edible oils and sugar. Punjab is witnessing rapid growth in the production of light engineering goods, pharmaceuticals, leather goods, food products, textiles, electronic goods, machine tools, hand tools, agricultural implements, sports goods, paper and paper packaging. The main industrial centres in Punjab are Ludhiana, Jalandhar, Amritsar, Mandi Gobindgarh and Mohali. The district of Ludhiana often referred to as 'Manchester of India' leads in industrialization, accounting for more than 52% of the industrial output, 24% of industrial units and about 33% of industrial workforce of the state (Source: Department of Industries & Commerce, Government of Punjab). It has the largest number of large and medium units. The district is a major exporter of textiles, light engineering products like machines tools, hand tools and sewing machines, bicycles and bicycle parts and auto components. Jalandhar is known mainly for leather goods, sports goods and sewing machines, while Amritsar has been strong in food processing and textiles. Mandi Gobindgarh, also called the Steel Town of Punjab, is a cluster for rolling and re-rolling mills (secondary steel), an essential link in the supply chain of the iron and steel industry. 21 Investment Climate - A Report on Northern States of India

26 District No. of units Employment District-wise Status of Small Scale Units (as on ) Fixed Investment (Cr. Rs) Production (Cr. Rs) Amritsar 25,364 1,14, ,046 Barnala 1,788 6, Bathinda 4,209 21, ,149 Faridkot 2,188 13, Fatehgarh Sahib 3,087 18, ,577 Ferozepur 4,340 19, Gurdaspur 9,435 56, ,050 Hoshiarpur 6,457 27, Jalandhar 22,906 1,37, ,922 Kapurthala 4,198 21, Ludhiana 38,393 3,08,713 1,443 21,651 Mansa 1,971 7, Moga 3,281 21, Mukatsar 3,368 18, Nawanshahar 2,380 8, Patiala 7,844 41, ,649 Ropar 2,816 12, S. A. S. Nagar 6,063 30, Sangrur 10,636 52, ,092 Tarn Taran 1,835 5, Total 1,62,559 9,44,241 5,972 41,897 Source: Department of Industries & Commerce, Govt. of Punjab District-wise Status of Large/ Medium Units (as on ) Distrct Units Employ ment Large Enterprises Medium Enterprises Fixed Investment (Cr. Rs) Production (Cr. Rs) Units Employ ment Fixed Investment (Cr. Rs) Production (Cr. Rs) Amritsar 9 5,381 1, Barnala 6 12,599 2,373 1, Bathinda 16 8,390 2,510 4, Faridkot Fatehgarh Sahib 6 2, , Ferozepur 7 1, Gurdaspur 12 2, Hoshiarpur 20 13,858 2,369 3, Jalandhar 16 5, Kapurthala 6 16,447 1,919 2, Ludhiana 98 74,307 7,189 12, , Mansa Moga 2 1, , Mukatsar 3 1, S.B.S. Nagar 9 5,363 1,280 7, Patiala 17 12,082 1,376 5, Ropar 4 2, , S.A.S. Nagar 55 32,668 6,126 7, , Sangrur 17 8,104 1,668 3, Tarn Taran Total 306 2,07,895 31,447 55, , ,356 Source: Department of Industries & Commerce, Govt. of Punjab Investment Climate - A Report on Northern States of India 22

27 RAJASTHAN Rajasthan started experiencing industrial development as early as the 1950s. Large and small scale industries started springing up in the Kota, Jaipur, Udaipur, Bhilwara and other Industrial Estates of Rajasthan. The main industries of Rajasthan today include textile, auto and auto components, IT/ITES, mining, gems & jewellery, tourism and agro-based industries, rugs, woolen goods, vegetable oil and dyes. Heavy industries consist of copper and zinc smelting and the manufacture of railway rolling stock. The other industries include steel, cement, ceramics and glass wares, electronic, leather and footwear, stone and other chemical industries. Rajasthan is one of the largest mineral producing states in India, thus making it a key player in mining industry. The main industrial centres in Rajasthan are Jaipur, Kota, Udaipur, Alwar and Jodhpur. Jaipur, one of the three cities in the golden triangle, is 260 km from Delhi. Jaipur is an important tourist destination and a shopper's paradise. It has 19 industrial areas with the product base including gems & jewellery, textiles, marble, granite and engineering items. It is also a potential destination for IT and ITES industries coming to the state. Alwar has large number of industrial units operating especially in the auto & auto component sector. Kota is located in the South-eastern part of Rajasthan and is home to Asia's largest fertilizer plant, a precision instrument unit and an atomic power station. Other important industries include chemicals, fertilizers, synthetic fibres, tyre-cord and sophisticated instruments. Udaipur is known for its exquisite arts, crafts and miniature paintings, and also hosts the Shilpgram festival, which attracts thousands of tourists. Jodhpur, a popular tourist destination, and also has agricultural equipment units and copper based alloy industries. Details of MSME and Large & Medium Enterprises (As on December 31, 2010) Registered units Employment Investment (Numbers) (Numbers) (Rs in Crore) MSME 3,34,518 13,95,979 10,585 Large & Medium Scale Industries 302 1,35,910 62,263 Source: Department of Industry, Govt. of Rajasthan UTTAR PRADESH The availability of good natural resources and abundant manpower spurred the growth of the industry in the state. About 3,89,000 Small Scale Industries like hand-knitted woolen carpets, woodcarving, brass metal industries, terracotta, etc. provide large employment opportunities. Three most prominent industries in the state are sugar, cotton fabrics and diversified food preparations. The state is the largest producer of sugar in the country. Most of the industrial units are based on co-gen technology. UP is in the top quartile in the total number of factories in the country. The electronics, leather, textiles and mineral-based industries have shown a promising growth over the years. Uttar Pradesh emerged as a hub for IT companies and ranks fourth in terms of software exports. Noida SEZ is a major hub for multinational firms outsourcing IT. Majority of electronic companies are located in Noida and Ghaziabad. The rich archaeology heritage of the state makes it a favourite tourist destination. The other important industries of the state are sports good, handloom and handicrafts industry. Apart from this, the state is an important centre for petroleum, chemical and fertilizers units. The towns of Firozabad and Khurja are renowned for glass and pottery industry. 23 Investment Climate - A Report on Northern States of India

28 Lucknow, popularly called as 'The City of Nawabs', is rapidly emerging as a manufacturing, commercial and retailing hub. Traditionally, Lucknow is famous for its embroidery, silk sarees and handicrafts. Also, Lucknow, Agra, Fatehpur Sikri are the hub of tourist destinations. Meerut is famous for its handloom works and scissor industry, textiles, sugar, distillery, chemical, engineering, paper and sports good industry. Mathura has one of the largest oil refineries of Asia i.e. Mathura Refinery. The other important industry of the city is textile industry including both sari printing and fabric dyeing. Sahibabad and Kanpur are the other two major industrial centre of the State. Details of Factories and Employment Year Registered Factories Total Employees (Number) Source: Statistical Abstract of U.P (Number) ,361 3,74, ,514 3,98, ,550 4,21, ,109 4,68, ,047 5,90, ,354 6,38,531 UTTARAKHAND Uttarakhand is now home to several of the nation's leading industries, which have a strong foothold in the manufacturing and services sectors like engineering and allied and ICT. The Concessional Industrial Package 2003, of the government of India, has enabled the state to attract significant investments. Secondary sector contribute nearly 34% to the GSDP of Uttarakhand. The state is abundant with natural resources owing to hills and forests. Thus the potential for food processing, horticulture and floriculture industries is significant. Apart from this, important industries of the state includes tourism, pharmaceuticals, IT/ITes, biotechnology, hydro-electric, mines and minerals, textiles and leather industry. Availability of bagasse and wood in the state led to establishment of large number of paper manufacturing units in the state. The state has emerged as a major auto hub in the North with most of the Indian auto majors having a presence in the state, the likes of Tata Motors, Hero Honda, Ashok Leyland, Mahindra and Mahindra, and Bajaj Auto. Districts of Haridwar, Udham Singh Nagar and Dehradun have emerged as important industrial centers. The state has successfully developed integrated industrial estates at Haridwar, Pantnagar and Sitarganj. MSME and Large & Medium Enterprises Registered/Working Units Employees (Number) Large & Medium 147 Enterprises ( ) MSME 23,767 82,621 Source: Directorate of Economics & Statistics, Uttarakhand Fourth Census of registered MSMEs, Department of Industries, Govt. of Uttarakhand Investment Climate - A Report on Northern States of India 24

29 Investments under the CIP (Figures are from 1 Jan 2003 to 3 March 2010) District No of Units Investment ( Rs crore) Employment Almora Bageshwar Chamoli Champawat Dehradun ,669 Haridwar ,581 72,269 Nainital ,681 Pauri Garhwal ,359 Pithoragarh Rudraprayag Tehri Garhwal Udham Singh Nagar ,413 51,023 Uttarkashi Uttarakhand 2,391 25, ,703 Source: Directorate of Industries, Government of Uttarakhand Observations & Conclusions The contribution of the Northern region to total output stands at 21.7%, rather low as compared to its size. The number of factories stands at 25.1%, value addition at only 13.13% and Invested capital at 21.1%. In terms of number of factories, the leading states are Uttar Pradesh, Punjab, and Rajasthan. Some of the leading manufacturing clusters that have emerged in the another region are Gurgaon, Panipat, Rewari, Ambala and Faridabad, in Haryana; Baddi, Parwanoo, Kala Amb and Nalagarh in Himachal Pradesh; Ludhiana, Jalandhar, Amritsar, Mandi Gobindgarh and Mohali in Punjab; Jaipur, Kota, Udaipur, Alwar and Jodhpur in Rajasthan; Noida, Ghaziabad, Firozabad, Khurja, Sahibabad and Kanpur in Uttar Pradesh; Haridwar, Pantnagar and Sitarganj in Uttarakhand. Some of the leading industries are auto and auto components, textiles, sports goods, leather, light engineering, machine tools, hand tools, paper, cement, IT/ITeS, petro-chemicals, food & fruit processing, secondary steel, mining, etc. 25 Investment Climate - A Report on Northern States of India

30 Availability of land at competitive rates is a crucial component affecting investment decisions. Land policies are determined at the state level and these have a significant impact on the locational preference of investments. CHANDIGARH The Chandigarh Industrial and Tourism Development Corporation Limited is the sole agency for administering industrial land in UT of Chandigarh. The Corporation has so far constructed and allotted 548 industrial sheds of various sizes. Chandigarh Administration earmarked 1,475 acres of land for Industrial Area, Phase-I & II which came into existence during the year 1970 The administration is also developing Industrial Area, Phase-III in Mauli Jagraon for which an area of 152 acres of land has been earmarked The development work has been completed by the Engineering Department and the work for the layout plan of 25 number industrial plots has already been completed Rajiv Gandhi Chandigarh Technology Park (RGCTP) Rajiv Gandhi Chandigarh Technology Park (RGCTP) provides world class integrated infrastructure to Technology Companies and IT/ITES/BPO companies. The anticipated benefits from RGCTP (by the end of the year ) are as indicated below Phases Source: Department of IT, Chandigarh Anticipated Investments in RGCTP Total Employment Software Area Investment Generation Export (in acres) (Rs in Crores) (Direct) (Rs in Crores) Phase I & II 3,700 32,700 2, Phase III 2,500 35,000 2, TOTAL 6,200 67,700 4, The actual outcome from RGCTP upto is given below Employment Chapter 3 LAND AVAILABILITY Investments in RGCTP Source: sezindia.nic.in, Ministry of Commerce & Industry Plan for RGCTP includes an integrated Habitat Centre (a PPP model), a Hotel cum Convention Centre, a Meditation cum Rejuvenation centre, a Shopping Mall cum Multiplex, besides essential services like sewage, water supply etc., adequate green spaces and parking facilities. Total physical exports Total investment made Direct Indirect (Rs in Crores) ( Rs in Crores) 3, Investment Climate - A Report on Northern States of India 26

31 Some of the other new initiatives being planned by the Chandigarh Administration are Proposed Projects Name Location Area (in acres) Jawaharlal Nehru Chandigarh Education City Sarangpur, Chandigarh 130 Multimedia Centre-cum-Film city Sarangpur, Chandigarh 30 Amusement Park cum Theme Park Sarangpur, Chandigarh 73.3 Entrepreneur Development Centre RGCTP 1.56 Source: Chandigarh Administration DELHI The Delhi State Industrial and Infrastructure Development Corporation Ltd. (DSIIDC) has played a key role in shaping the industrial growth of the Indian capital. Some of the key industial areas developed by DSIIDC are Narela Industrial Complex: In 1978, DSIIDC was given responsibility for development of 612 acres of land at Narela. It has completed the first phase of development of 1,800 plots. Of the remaining land available in the estate, 70 acres is now proposed to be utilized for re-location of industries. There is another proposal for construction of a high-tech-estate for ITES in an area of 50 acres. The Government of Delhi has approved proposal of DSIIDC to develop a Knowledge Based Industrial Park at Baprola in an area of 70.6 acres on two pockets of approx acres and 4.99 acres situated on either sides of Nangloi-Najafgarh road. Bawana Industrial Area: It covers an area of 23,366 hectares of land and DSIDC will develop 15,250 plots of square metre each. Other industrial areas developed by DSIIDC include Kirtinagar, Mongolpuri, Naraina and Okhla. Delhi Development Authority (DDA) is the other agency facilitating development of industrial areas. It has developed industrial area catering to 12,000 units in the city. DDA has so far acquired 67,355 acres of land and out of which 3,250 acres of land for industrial purposes have already been developed. There are 23 Industrial Estates under DDA. DMRC has developed Delhi IT Park close to Shastri Park metro station- block 1 is operational, block 2 is completed and block 3 yet to be constructed. HARYANA Haryana State Industrial Development Corporation (HSIDC) is the nodal agency for industrial infrastructure development in the state and also provides industrial plots/sheds. So far, it has developed 35 industrial estates with 5,417 fully developed plots and 585 sheds. Haryana Urban Development Authority (HUDA) also developes and sells industrial plots. Till date, HUDA has developed 82 industrial estates with 12,300 plots. 27 Investment Climate - A Report on Northern States of India

32 Industrial Estates under Development IMT, Manesar: on NH8 Delhi-Jaipur 1749 acres acquired Growth Centre, Bawal : On NH acres Phase-I developed EPIP Kundli on NH-I :Fully developed Kundli Phase IV : Located on Delhi-Haryana border. 400 acres acquired. Barhi near Ganaur : On NH-I, 55 Kms from Delhi. 330 acres already acquired. I.E Barwala : developed IIDC Sirsa : 74 acres of land have been acquired I.E, Manakpur : Source: HSIIDC Name of the Estate near Jagadhari, 135 acres of land acquired Industrial Estates and IMTs Average Rates (Rs per sq. meter) Gurgaon, Manesar 15,400 Kundli 5,500 Saha, Mankpur, Ambala cantt, Yamunanagar 1,750 Panchkula 8,625 Kalka, Barwala 1,550 Samalkha, Panipat, Murthal,,Sonepat, Rohtak 3,417 Faridabad 6,875 Bahadurgarh, Barhi 4,250 Bawal, Jind, Narwana, Narnaul, Sirsa 2,548 IE Rai, Food Park Rai 5,500 Note: Indicative Rates are the average rates of the the areas Source: EMP2011, HSIIDC HIMACHAL PRADESH An investor in Himachal Pradesh can purchase land through the following options Government Land Private Land Industrial Parks/Estates Industrial areas are being presently developed and maintained by the Department of Industries and through agencies like Himachal Pradesh State Industrial Development Corporation (HPSIDC) and Himachal Urban Development Agency (HIMUDA). Department of Industries has identified land in various districts of HP and has constituted a Land Bank comprising of Private and Government Land for the information of the prospective entrepreneurs. Industrial estates of the state are located in the districts of Bilaspur, Chamba, Hamirpur, Kangra, Kinnaur, Kullu, Lahul-Spiti, Mandi, Solan, Shimla, Sirmour and Una. Investment Climate - A Report on Northern States of India 28

33 The industry department land with the state government is given below Vacant Industrial Plots in Himachal Pradesh Name of Distt. Name of Tehsil Area (in bighas) Land Alloted (in-bighas) Vacant (in bighas) Solan Nalagarh/Baddi Kasauli Kandaghat Total Hamirpur Bhoranj Hamirpur Barsar(up Teh.Datwal) Total Bilaspur Naina Devi Una Shimla Bagana Amb Una Total Shimla(R) - 4/6240Sq.mtr - Theog Jubble - - 6/300 Sq.mtrs. Total Land=8-01 Plot=4/6240 Sq.mtrs. Shed=6/300 Sq.mtr. Mandi Mandi / Sq.mtr. Sarkaghat - - 4/2618 Sq mtr Total Sq.mtrs Land= Land= bighas bighas Bighas Grand Total Plot=4/6240 Sq.mtrs. Plots=9/4524 Sq. mtr Sheds=8/474 Sq.mtr Source: HPSIDC 29 Investment Climate - A Report on Northern States of India

34 JAMMU & KASHMIR In Jammu and Kashmir, land is allocated by the State Industrial Development Corporation (SIDCO). The corporation is developing new Industrial sites at the following places. A vast variety of industries have come up in these estates that include iron & steel based, wood based, plastic based, ferrous and non-ferrous, food based, textiles, cement based etc. Industrial Estates / Growth Centres Name of District Kashmir Division Srinagar Budgam Pulwama Baramula Jammu Division Jammu Kathua Source: SIDCO Name of Industrial Estate/ Growth Centre Khanmoh - Industrial Estate Khanmoh - Food park Shalteng Rangreth EPIP Ompora Lathipora IGC Lassipora - Growth Centre Doabgah - Food Park Bari Brahmana EPIP Kartholi IGC Samba Kathua The allotment of land in these estates is guided by the State Industrial Policy and all allotment is made by the concerned Single Window Committee headed by the District Development Commissioners of the Districts. Premium rates are notified by the government from time to time and do not change after the land has been allotted to the promoter and a lease deed signed by him after paying the amount of premium. The current rates of premium are as follows Premium Rates in SIDCO Industrial Areas Class/Area A-Class B-Class C-Class For land/plot not exceeding four kanals 60,000/- 45,000/- 30,000/- For land/plot not exceeding eight kanals 90,000/- 67,500/- 45,000/- For land/plot not exceeding twenty kanals 1,20,000/- 90,000/- 60,000/- For land/plot exceeding twenty kanals Cost of Acquisition plus Cost of Development plus 10% Surcharge Source: SIDCO PUNJAB The Government of Punjab has a land allotment policy. The Department of Industry is responsible for identifying and developing locations suited for Industrial purposes. Some of the important Industrial /IT parks in the state are IT Park, Mohali: IT Park, Mohali is spread over an area of 1.5 acres. It has uninterrupted power supply through a dedicated industrial feeder with 24X7 power supply. Investment Climate - A Report on Northern States of India 30

35 ELTOP IT Park, Mohali: ELTOP IT Park, Mohali is spread over an area of more 365 acres. Some of the major facilities available in the IT Park are a) Centre for Electronics Design and Technology b) Well established Electronics Research and Development Centre c) Established STPI for export of software Food park project, Sirhind, Fatehgarh Sahib District: Food Park Project spread over 25 acres and is one of India's largest and most sophisticated integrated vegetable and fruit processing complexes with support facilities for an annual capacity of over 5,000 million tonnes. Apparel Park, Doraha, Ludhiana: Integrated Textile Park with 115 plots jointly developed by Punjab Small Industry and Export Corporation Limited and the Association of Textile Industry. Biotech Park, Dera Bassi: Developed in PPP model, first cluster to have 10 to 15 industrial units in agribiotech and healthcare sectors. Quark city, Mohali: Spread over 51 acres, it has a built up area of 4 million sq.feet. Projetcs in the city are expected to generate direct and indirect employment of about 1,20,000. Yellowstone Landmark Infocity: An integrated IT Township at Mohali is being developed in a area of around 220 acres, including built up IT offices, BPO/ Institutional space, residential units, hyper-markets, shopping areas, multiplex, luxury hotel, budget hotel and a premium clubhouse etc. Pipeline Projects Name Location Area (in acres) Global Industrial and Knowledge City Rajpura 1359 Tech Know Park Ropar 289 IT Park Doaba 46.8 IT Park Railmajra Nawanshahar IT Park Saneta Mohali 44 Yellowstone Landmark Infocity Mohali 220 Source: punjabinfotech.org RAJASTHAN In Rajasthan, the land is administered by Rajasthan State Industrial and Investment Corporation (RIICO). It has so far developed 321 Industrial Areas by acquiring about 61,772 acres of land. RIICO has also embarked upon creation of Special Purpose Industrial Parks with industry specific infrastructure. Some of the important parks are Special Economic Zones(Jaipur and Jodhpur) Agro Food Parks (Kota, Jodhpur, Sriganganagar and Neemrana) Export Promotion Industrial Parks(Jaipur, Jodhpur, and Neemrana) Information Technology parks (Jaipur Jodhpur, Kota and Udaipur) Gems & Gold Jewelry Complex (Sitapura,Jaipur) Textile City (Bhilwara) Leather Complex (Manpur Macheri,Jaipur) Ceramics Complex (Khara, Bikaner) Minor Mineral Complexes (Karauli,Sawai Madhopur, Dhoinda in Rajsamand and Mitrapura in Dausa) Bio-Tech Parks (Sitapura- Jaipur and Chopanki-Bhiwadi) 31 Investment Climate - A Report on Northern States of India

36 Industrial Estates Developed by RIICO S.No. Name and Location Area(in acres) Development Rates (Rs Per sq.m) 1 SEZ Sitapur, Jaipur ,800; 10% extra for corner plots 2 SEZ Boranada, Jodhpur 2,22,880-3 EPIP, Jaipur EPIP, Boranda, Jodhpur IT park Sitapur Jaipur to 2,000 6 IT Park, Udaipur to 2,000 7 IT Park Ramchandrapur, Jaipur 10 1,500 to 5,000 8 IT Park kota 7-9 IT Park Jodhpur Agro food park - (a) Ranpur, kota (b) Boranda jodhpur (c) Sriganganagar (d) Alwar Biotech Park Sitapur Plots not alloted 12 Stone Park Dholpur Neemrana Japanese Park 1, Spices Park 30 - Source: RIICO UTTAR PRADESH Uttar Pradesh State Industrial Development Corporation (UPSIDC), an undertaking of the State Government has been the driving force behind industrial ventures in the State since UPSIDC has developed 155 Industrial Areas encompassing 41,948 acres of land with a wide range of infrastructure facilities. UPSIDC has housed more than 7,800 units in various industrial areas. Industrial Clusters Type Location Area (in acres) Cost( Rs Lakhs) Bijoli, Jhansi Growth centres Shajahanpur Dibiyapur Jainpur Agro parks BarabankI 180 1,543 Varanasi 261 2,250 Apparel parks TronicaCity 145 5, Textile and hosiery parks Kanpur 174 2, Leather technology parks Banther, Unnao 233 2,400 Export promotion industrial parks Greater Noida 200 2,000 Shastripuram, Agra 102 2,100 Software Technology 13,000 sq ft, of which 9,296 sq ft of area is being utilised Parks of India (STPI) by 15 units. The park is fully operational Source: Annual Plan ( ), Planning Commission of UP, UPSIDC Investment Climate - A Report on Northern States of India 32

37 Premium Rates of Industrial Areas For Name Approved Rates (Rs per sq.mts) Agra 770 to 2,100 Aligarh 555 to 1,400 Allahabad 150 to 750 Varanasi 360 to 1,320 Bareilly 180 to 1,210 Ghaziabad 2,750 to 13,750 Gorakhpur 225 to 880 Kanpur 240 to 34,120 Textile complex 610 to 38,745 Surajpur 660 t0 6,050 SEZ Moradabad 1,335 Lucknow 180 to 1,820 Faizabad 180 to 880 Meerut 850 to 3,850 Tronica city 3,100 to 6,000 Jhansi 365 to 730 Source: UTTARAKHAND State Industrial and Infrastructural Development Corporation of Uttarakhand (SIDCUL), a Government of Uttarakhand Enterprise promotes industrial development in the state. In Uttarakhand, land is administered by SIDCUL. Major Industrial Infrastructure being developed by SIDCUL includes Integrated Industrial Estate at BHEL, Haridwar Integrated Industrial Estate at Pantnagar IT Park, Dehradun Pharma City - Selaqui, Dehradun Growth Centre at Pauri Integrated Industrial Estate at Sitarganj Industrial Estates Name of Industrial Estate Area(in acres) Industrial Land(Base) Rate (per sq.mts) Integrated Industrial Estate, Haridwar 2034 Rs 3, Integrated Industrial Estate, Pantnagar 3339 Rs 4, Pharma City, Selaqui Industrial Area, Dehradun 50 Rs 3, Sigaddi Growth Centre - Kotdwar, Distt. 100 Rs 3, Pauri Garhwal Source: SIDCUL website 33 Investment Climate - A Report on Northern States of India

38 SPECIAL ECONOMIC ZONES (SEZs) The establishment, development and management of SEZs in India are governed by the SEZ Act, 2005 and SEZ Rules SEZs are notified by the Ministry of Commerce and can be set up by private developers (including foreign companies) or by central / state governments or jointly by any two or more of the above. The zones are required to have a minimum contiguous area of 1000 hectares. However, SEZs established exclusively for services, product specific zones (such as IT SEZs, electronic hardware SEZs, textile SEZs) as well as port and airport based zones can be of smaller areas. CHANDIGARH The Chandigarh administration adopted the Special Economic Zone Policy in the year The approved policy regime incorporates: Single window clearance system in setting up a unit in SEZ Creation of employment opportunities Development of infrastructure facilities and amenities in the Zone Exemption under State/UT taxes as well as certain Central taxes viz- Value-added tax, Property tax, Electricity duty, Octroi duty, Central Sales Tax, Stamp duty. SEZ in Chandigarh approved by Ministry of Commerce (MOC) Formal approvals to SEZs Formal approvals 2 In-principle approvals 2 Operational 1 Type of SEZs Area in Hectares (a) Electronics and IT/ITES (b) IT/ITES Total Developing Agency Chandigarh Administration Source: SEZ India, Ministry of Commerce & Industry DELHI The state announced its SEZ policy in The Government of NCT of Delhi has notified SEZ policy to promote Gem & Jewellery and IT sector by establishment of SEZs in NCT. Two sectors specific SEZs are proposed to come up at Village Baprola, Delhi and developed by DSIIDC. The Government of India has formally approved setting up of these two SEZs by DSIIDC. SEZs in Delhi approved by MOC S.No. Name of the Developer Location Type of SEZ Area(in Hectares) 1 M/s. Delhi Metro Corporation Shastri Park, Delhi IT 6 2 Delhi State Industrial Information Baprola village, Delhi IT Development Corporation Ltd. 3 Delhi State Industrial Information Baprola village, Delhi Gem and Jewellery Development Corporation Ltd Source: SEZ India, Ministry of Commerce & Industry Moreover, the new Industrial Policy ( ) of the state proposes to develop a Electronic/Light Engineering Park/SEZ in order to promote hardware and IT sector together. Investment Climate - A Report on Northern States of India 34

39 HARYANA The Special Economic Zone Act for the state came into effect from January 2006, with the sole objective of promotion and establishment of large self contained industrial townships and superior infrastructure. Out of 100 proposals for setting up SEZ in the state, 31 have been notified by the Government of India and 35 have been accorded formal approval as specified in the new Industrial Policy The status of SEZs in the state is given in the following table Status of SEZs in Haryana S.No. Prominent SEZs Developed/in Pipeline in Haryana Area in Hectares 1 Reliance Industries Limited at Gurgaon & Jhajjar 10,000 2 DLF Universal Limited at Gurgaon 8,097 3 DLF Universal Limited at Ambala 1,012 4 Unitech Commercial Limited at Kundli 4,000 5 D S Construction Palwal (Faridabad) 5,000 6 Raheja Haryana SEZ Developers, Dharuhera 2,000 7 European Technology Park Nanocity Panchkula 11,138 9 Petrochemical Hub at Panipat 2, Total 43,447 Source: HSIIDC HIMACHAL PRADESH There are three in-principle approved SEZs in the state. The status of SEZs is given in the following table SEZs in Himachal Pradesh Type of SEZ Location No. Area(in Hectares) (1) Kangra 1 1,000 Multi-product (2) Solan Airport-based Una 1 3,230 Source: SEZ India, Ministry of Commerce & Industry SEZs in Kangra, Solan and Una districts of the state have been approved with an estimated cost of US$ 1.8 billion. PUNJAB The state adopted the Special Economic Zones Policy with effect from August 2005 to provide a comprehensive framework for the establishment, management, and development of SEZs. Punjab became the 6th state to enact a SEZ Act in the year 2009, desired to fulfill the growing demands of the infrastructure investors. Some of the salient features of the act are as follows Exemption from payment of any tax duty, fee, cess or any other levy Exemption from stamp duty, registration fee and social security cess on purchase of land for SEZ and on first transfer or lease of immovable property within SEZ in Punjab Act Permission for generation of electricity in or outside SEZ for consumption of units in SEZ No electricity duty on generation, transmission and distribution and consumption of electricity within SEZ All SEZ units will be given a public utility status 35 Investment Climate - A Report on Northern States of India

40 SEZ in Punjab approved by MOC Formal approvals to SEZs Formal approvals 8 In-principle approvals 7 Notified 2 Type of SEZs Area in Hectares (a) Multi-product 1011 (b) FTWZ 40 (c)textiles 160 (d) Engineering 140 (e) Food Processing 100 (f)textile 100 (g) Auto 100 (h) Engineering Components 110 (i)processing - Total 1761 Source: SEZ India, Ministry of Commerce & Industry Some of the pipeline private SEZs of the state are given in the following table Proposed SEZs Name of the Unit Location of Area Proposed Employment Status Unit (in Hectare) Investment Potential (Rs in Crores) (Direct/Indirect) Shipra Estate Ltd. IT SEZ at Mohali In Principle approved by GOI Sukhmani Towers IT SEZ at Derabassi, In Principle (P) Ltd. Mohali approved by GOI A-Tech IT City IT SEZ at Mohali Recommended to GOI Lark Project IT SEZ at Landran, In Principle (P) Ltd. Mohali approved by GOI Source: Punjab Infotech, Government of Punjab RAJASTHAN With the prime objective of developing specially delineated economic zone for promotion of exports, the state's policy for SEZs came into force in Apart from the existing three SEZs in the government sector and one mega-sez, Mahindra World City, in the joint sector, the state has 8 approved SEZs, out of which 7 are notified. A new SEZ Act has been enacted for SEZ to be developed in the state. The policy and the act provide a number of concessions and incentives for SEZ developers and units to be set up in SEZ, such as Single window clearance Exemption from all state and local taxes and levies, payment of stamp duties Exemption in luxury tax, electricity duty, lease and registration fee Identical status to the developer and co-developer of SEZ and levying of only token amount as land conversion fee Investment Climate - A Report on Northern States of India 36

41 Status of SEZs in Rajasthan Developer Location Type of SEZ Area(in hectares) Estimated Investment (Rs in Crores) Estimated Employment Status Rajasthan State Industrial Development and Investment Corporation Limited (RIICO), Jaipur Sitapura, Jaipur (SEZ-I) Product Specific for Gems and Jewellery ,800 Notified and Operational Rajasthan State Industrial Development and Investment Corporation Limited (RIICO), Jaipur Sitapura, Jaipur (SEZ-II) Product Specific for Gems and Jewellery ,700 Notified and Operational Rajasthan State Industrial Development and Investment Corporation Limited (RIICO), Jaipur Mahindra World City (Jaipur) Ltd. Somani Worsted Limited Mansarovar Industrial Development Corporation Vatika Jaipur SEZ Developers Ltd. RNB Infrastructure Pvt. Ltd. Boranada, Jodhpur Product Specific for handicrafts ,200 Notified and Operational Jaipur IT/ITES ,450 Khushkera, Bhiwadi Jodhpur Electronics Hardware and Software/ ITES Handicrafts (incl. furniture) Notified and Operational ,000 Notified ,000 Notified Jaipur IT/ITES ,500 20,000 Notified Pugal Road, Bikaner Textile ,000 Notified Mahindra World City (Jaipur) Ltd. Jaipur Handicrafts ,520 Notified Mahindra World City (Jaipur) Ltd. GENPACT Infrastructure (Jaipur) Pvt. Ltd. Source: RIICO Jaipur Light engineering, Automotives ,070 Notified Jaipur IT/ITES ,000 Formal Approval 37 Investment Climate - A Report on Northern States of India

42 UTTAR PRADESH The state amended its SEZ policy in 2007 in order to foster the industrial and economic development and creating a conducive environment for the development of SEZ. As on 24 January 2008, the state of Uttar Pradesh has 37 SEZ projects of which 29 SEZs are located within the influence area of DMIC. It is important to note that the number of SEZ projects have almost doubled within a span of less than one year (20 projects as on 19/04/07). It is also observed that two SEZ projects located at Noida and Moradabad in the state have been operational prior to the issue of SEZ Act Among the notified/formally approved SEZs, IT/ITES sector dominates the share. The state has six functional(government/private), 12 notified and 58 proposed SEZs upto while the total year-wise exports from government and private SEZs is Rs crore and Rs 506 Crore respectively. Status of Functional SEZs as on Government SEZs notified under SEZ Act 2005 Name Type Area No. of units Employment Total Total (in acres) approved Physical Investment Direct Indirect Exports (including (Rs in FDI), Crores) Rs cr Noida SEZ Multi-product , SEZ Moradabad Product -specific ,000 21, Total ,882 21, Source: sezindia.nic.in, Ministry of Commerce and Industry Private SEZs notified under SEZ Act 2005 Name Type Location Area (in acres) No. of units approved Employment Total Total Physical Investment Exports (including Direct Indirect (Rs in FDI), Source: sezindia.nic.in, Ministry of Commerce and Industry Facilities and Provisions offered by the Government of Uttar Pradesh to SEZs Since SEZs are termed as an 'engine of growth', a number of incentives are provided in order to spur industrial development and to boost exports. Fiscal incentives: Exemption from all kinds of state taxes, levies, cess or taxes imposed by local bodies and authorities Simplification of Labour Rules Other incentives: Exemption from electricity duty and taxes on energy generated or purchased for utilization of service in SEZ. Besides this, the industrial units setting up operations in SEZ are exempted from taxes and additional taxes on the transport vehicles which are to be used in that area, along with essential services like water supply. Crores) Moser Baer India Ltd. Non-conventional Greater Noida ,193 Energy Wipro Technologies Ltd. IT/ITES Greater Noida , HCL Technologies Ltd IT/ITES Noida ,083 3, Seaview Developers Ltd IT/ITES Noida Total ,708 4, ,326 Rs cr Investment Climate - A Report on Northern States of India 38

43 UTTARAKHAND There are two notified SEZs and three formally approved SEZs in the state. Observations and Conclusions Northern region states are focusing on promoting industries in industrial estates and industrial area. This model of planned development and integrated industrial development helps provide industry appropriate industrial infrastructure. However issues related to land acquisition, land use conversions for development of these industrial areas/estates remain. 39 Investment Climate - A Report on Northern States of India

44 Chapter 4 EASE OF DOING BUSINESS IN THE STATES The efficacy of the regulatory framework in states is an important parameter influencing investment considerations. Regulatory efficacy is seen to differ across the different states of India and hence merits due focus in the context of analyzing a particular state's investment climate. Regulatory efficacy affects the ease of doing business in a particular state in terms of entry norms, labour relations and flexibility in labour use, exit procedures, taxation policies etc. The essential point is, whether regulations are designed in incentive compatible ways to facilitate business and are implemented without undue harassment and corruption. Despite a similar regulatory framework for business registration across the country, there are noticeable differences in time, cost and number of procedures due to local state government practices, different performance of local branches of national agencies and variations in local taxes and fees. Some states in India fare better on the number of procedures due to different requirements at the state and municipal level. Entry and exit options for firms is an important determinant influencing investment decisions. A strict regulatory environment that impedes entry/exit can have the detrimental effect of bolstering high costs and reducing the attractiveness of any particular location. The central government in general and the state governments individually have been initiating reforms to facilitate entry options for business and usher in an investment friendly environment. Closure procedures though can be extremely cumbersome and long drawn. It is entirely common for proceedings to take several years and sometimes the average number of years needed to complete a closure procedure for an incorporated medium sized business is a staggering 10 years. However, India's legal and regulatory framework in the area of bankruptcy has advanced in the last two decades. The DRTs (Debt Recovery Tribunals) introduced by the central government in 1993, along with the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI) have been effective in terms of amount recovery. However, there are variations in the speed and cost of the insolvency process and the recovery rates across Indian states. It would be useful to note in this context that e-governance initiatives of state governments also play an important role in facilitating business processes and accordingly, are viewed favourably by investors. In 2006, the Ministry of Corporate Affairs introduced the MCA 21 e-governance initiative for electronic registration of new businesses. Along with reforms relating to computerizing registrars of companies and introducing an electronic filing system for company name approval and company registration, acceptance of digital signatures and payment of fees by credit card has been made possible, reducing registration time. Company name approval now takes 2 days down from 4-6 days in In addition to the national reforms, a number of tax related services are being offered online by some states. For instance, in New Delhi stamp duty can be paid online on company documents. Taxpayers in New Delhi can now apply online for a Value Added Tax registration certificate. This section now focuses on the following issues i. Timelines/procedures for setting up manufacturing units in the states ii. Business facilitation by state governments 4.1 Time lines for setting up a manufacturing unit Inordinately long time lines taken to obtain necessary clearances not only lead to enormous delays, but also opens the door to possibilities for corruption. A necessary fall out is also that there is a huge discrepancy between approved investments and their implementation. From this point of view, it would be interesting to look into the timelines required for setting up a manufacturing unit in the states under consideration. It would also be of importance to look into whether measures have been initiated by the respective state governments in fast tracking investment proposals through single window clearance mechanisms or any other facilitation mode. Investment Climate - A Report on Northern States of India 40

45 DELHI The suggestive timelines for getting various clearances in setting up a manufacturing unit in Delhi is as following Timeline of various clearances required for setting up a manufacturing unit in Delhi S.No. Department 1 Directorate of Industries (A) Issuance of Part - I of Entrepreneurs Memorandum (B) Issuance of Part - II of Entrepreneurs Memorandum 2 Delhi Pollution Control Committee (a) Grant of Consent to establish Maximum time limit Five days Five days (1) For industries covered under Green Category Seven days (2) For industries covered under Orange Category One month (b) Grant of Consent to operate (1) For industries of Green Category. Two months (2) For Orange Category of industries Seven days 3 Trade & Taxes Department Registration of Trade Tax Seven days 4 Land Use Clarification Three days 5 Drug Controller (a) No Objection for grant of Licence One month (b) Drug Licence After establishment) 6 Forest Department No Objection from Divisional Forest Officer, if required. (For industries based on forest) 7 Excise Department (a) Excise Licence 8 Labour Department (a) Approval prior to construction of Factory (b) Registration/Licence under the Factories Act 9 Municipal Corporation of Delhi Building Map approval by Development Authority/Municipality/Town area of notified area 10 (i) Grant of provisional Municipal Corporation Licence by the Factory Licensing Department of MCD (ii) Grant of permanent Municipal Corporation Licence by the Factory Licensing Department of MCD 11 Delhi Fire Service Department No Objection relating to fire safety from Fire Officer 12 Delhi State Industrial Infrastructure Development Corporation Ltd. (No Objection Certificate for construction of factory building wherever required) 13 DIS CQM (i) NDPL (ii) BSES 14 Delhi Jal Board (i) Sewer Connection (ii) Water Connection Source: Office of Commissioner of Industries, Government of NCT of Delhi Two mmonth Two months One month I5-days 15-days One month Five days 90-days One month 15-days One month 5-days One month 41 Investment Climate - A Report on Northern States of India

46 Investment Facilitation The state government has set up Business Facilitation Council (BFC) to facilitate entrepreneurs in obtaining clearances from various departments /agencies for establishment of industrial enterprises in a time-bound manner. The constituents of BFC include representatives from Municipal Corporation of Delhi, Delhi Development Authority, Delhi Pollution Control Committee, Industrial Associations, Labour Department, Excise Department, Trade & Taxes Department etc. Delhi State Industrial Development Corporation Limited (DSIDC) is involved in providing infrastructure and marketing facilities to industries. HARYANA The state government has enacted the Industrial Promotion Act, 2005 for providing time bound clearances and approvals. This act also provides for issue of deemed approvals, in case the authority concerned fails to provide the same within the prescribed time frame. The following table shows the approximate time period required in obtaining the various clearances for setting up a manufacturing unit in Haryana. Timeline of various clearances required for setting up a manufacturing unit in Haryana S. No. 1 Concerned Department/Organisation Uttar Haryana Bijli Vitran Nigam/Dakhsin Haryana Bijli Vitran Nigam 2 Haryana Pollution Control Board 3 Town and Country Planning 4 Environment Department 5 Labour Department/Chief Inspector of Factories Clearances required Release of electric connection (a) For loads upto 20 Kilo Watt (b) For loads upto 70 Kilo Watt (c) For loads above 250 Kilo Watt (d) For loads above 1MW (i) Issue of No Objection Certificate (ii) Consent of trial production other than 17 highly polluting industries. (iii) Consent to operate production (iv) Permission to storage/ collect of Hazardous Waste (v) Renewal of consent (i) Change of land use in industrial zone. (ii) No Objection Certificate for establishment of industrial unit under the Urban Area Act. (iii) Approval of building plan Site clearance for 17 highly polluting industries identified by Government of India. (i) Approval of factory plan under the Factories Act, 1948 (Act 63 of 1948). (ii) License for running factory 6 Inspectorate of Boilers Registration of boilers 7 Directorate of Health Services Drug License 8 Excise and Taxation Sales Tax registration Note: * incase no augmentation is required ^ denotes deemed approvals Source: Haryana Government Industries Department Time limit for asking additional information (in days) Time limit for issuing clearances (in days) 7 21* 7 45 * 7 60 * 7 60 * 3 7 ^ ^ 7 15 ^ ^ ^ 7 15 ^ Investment Climate - A Report on Northern States of India 42

47 Investment Facilitation Haryana has set up Investment promotion centres in Delhi and Chandigarh to make the process of various sanctions/approval needed for implementation of projects easier by giving assistance and guidance to investors and entrepreneurs. The Government of Haryana has also constituted an Investment Advisory Council under the chairmanship of the Chief Minister and consisting of prominent industrialists to suggest required measures to the state government to attract domestic and Foreign Direct Investment. HIMACHAL PRADESH An indicative list of approvals for setting up business in Himachal Pradesh is as under Various clearances required for setting up a manufacturing unit in Himachal Pradesh List of approvals and clearances required Incorporation of the company Registration, IEM, Industrial licences Allotment of land Permission for land use Site environmental approval No Objection Certificate and consent under Water and Pollution Control Acts Approval of construction activity and building plan Sanction of power Registration under state's Sales Tax Act and Central and State Excise Act Departments to be consulted Registrar of Companies DIC** for SSI for large and medium industries State DI***/ SIDC**** / Infrastructure Corporation State DI, Department of Town and Country Planning State Pollution Control Board and Ministry of Environment and Forests State Pollution Control Board Town and Country Planning Authority State Electricity Board Sales Tax Department, Central and State Excise Departments Estimated time taken (in days) The state has a Single Window Clearance Facility, which is the nodal agency responsible for obtaining all necessary clearances for an investment proposal. The committee, headed by the Chief Minister of the State clears all proposals within 30 days of submission.* Note: * Department of Industries, Government of Himachal Pradesh ** District Industry Centre *** Department of Industries **** State Industrial Development Corporation Source: Investment Facilitation The Himachal Pradesh State Industrial Development Corporation Limited (HPSIDC) is the concerned agency for promotion, establishment and development of industrial estates. It also provides escorts services to entrepreneurs for matters concerning registrations and obtaining licenses and clearances from the statutory/other authorities. 43 Investment Climate - A Report on Northern States of India

48 JAMMU & KASHMIR The Industrial Policy, 2004 provides for a single window clearance system to new investors in a time bound manner. The procedural roadmap for obtaining various clearances and approvals for setting up an industry in the state is given below Various clearances required for setting up a manufacturing unit in Jammu & Kashmir S.No. Activity Agency Time Schedule (in days) 1 Provisional Registration GM DIC 1 2 Land Allotment/Earmarking MD SIDCO/SICOP/Director I & C 3 3 Power Availability Certificate CE M&RE 10 4 Consent to Establish J&K PCB 10 5 Clearance by DLC DLC/GM DIC 7 6 Clearance by APCC APCC/MD SIDCO 7 Total : 21 Source: Industries & Commerce Department, Government of Jammu & Kashmir Investment Facilitation The Jammu & Kashmir State Industrial Development Corporation is the state level nodal agency for single window clearance. It also offers a variety of financial assistance for setting up new units and for further expansion, diversification, and modernisation of existing units. Directorate of Industries and Commerce is the district-level committee for single window clearance and provides sanctions and clearances for setting-up small scale industrial units in the state. PUNJAB The suggestive timelines and procedures for getting various clearances/approvals from state departments/agencies are shown below Timeline of various clearances required for setting up a manufacturing unit in Punjab Service/Facility Time Limit (in weeks) Punjab Department of Industries Sponsoring of composite applications to the concerned department/agency Recommendation to GOI for Letter of Intent/Industrial License and Registration for Milk Products Sponsorship for essential Raw Material/inputs 4 Allotment of plots in Industrial Focal Points/ Growth Centers out of "Off the Shelf" Quota Incentives Investment Incentive 4 Sales Tax Exemption 1 Any other incentive 2 Sanction of Loan by PFC/PSIDC 8 Registration of Boiler by Chief Inspector of Boiler Punjab Department of Environment Site approval/environmental clearance by Competent State Authority for 20 Highly Polluting Industries 5 days weeks after the receipt of application if requirements are satisfied 2 months after receipt of application Investment Climate - A Report on Northern States of India 44

49 Adequacy Certificate from Competent State Authority (CSA) 1 month from receipt of application NOC. from Pollution Control Board in respect of : 1 month after submission of application A. Green Category i) Marginally polluting Industries 15 days from the receipt of ii) Moderately polluting industries application B. Red Category Clearance Certificate from Pollution Control Board Sanction to operate from Pollution Control Board in respect of : A. Green Category i) Marginally polluting industries ii) Moderately polluting industries B. Red Category Renewal of consent from the Pollution Control Board Chief Inspector of Factories Site clearance for 29 hazardous industries from the point of view of health, safety and welfare of workers Approval of factory plan under Factories Act, 1948 License for running the factory to be issued by the field officer Punjab State Electricity Board Sanction of Power a) S.P. (upto 20 KW ) Source: Department of Industries & Commerce, Government of Punjab 1 month from the receipt of application.1 month from the date of receipt of application 1 month after submission of compliance report of NOC 15 days from the receipt of application 15 days from the receipt of application 1 month from the receipt of application 3 months after submission of application Within 2 month of submission of renewal request 2 months from receipt of complete application Within 1 month from receipt of application 2 weeks from receipt of application Issue of Demand Notice 4 Release of connection after compliance of Demand Notice. 8 b) M.S. (21 to 99 KW) Issue of Demand Notice 4 Release of connection 12 c) L.S. (upto 500 KW) Issue of Demand notice 60 days Release of connection 12 d) L.S. (above 500 KW) Feasibility study Issue of Demand Notice Release of connection 11 KV 90 days 60 days 90 days 45 Investment Climate - A Report on Northern States of India

50 Investment Facilitation Punjab State Industrial Development Corporation (PSIDC) is the nodal agency to promote growth of the industrial sector by providing services pertaining to provision of industrial infrastructure, promotion of industrial and infrastructure projects through equity participation, providing financial assistance for private projects and providing escort services to private investors. RAJASTHAN Rajasthan Enterprises Single Window Enabling and Clearance Ordinance, 2010 came into effect from 26th January It aims to encourage investments in Rajasthan by facilitating the investors with any clearance related hassles and the paper works. Presently, this system is in force in the eight districts of the state and soon this will be extended to other districts of the state. The new mechanism will serve as a single point interface between investors and various government departments. Under the Ordinance, investments up to Rs 10 Crores would be cleared at the district level by a committee headed by the collector. The nodal agency for this would be the District Industrial Centres (DICs). The investments beyond Rs 10 Crores would be cleared by a state level empowered committee headed by the Chief Secretary. The Bureau for Industrial Promotion (BIP) will be the nodal agency for this category. Timeline of various clearances required for setting up a manufacturing unit in Rajasthan S. Service/facility Concerned agency Timelines (in days) No. 1 Industrial licence 15 Sponsorship for raw materials Industrial 2 and inputs Commissionerate and 30 State Revenue 3 Land allotment Department 30 days at the district level 60 days for state government approval 4 Incentives Bureau of Investment 30 days for clearance at district level and Promotion 45 days for clearance at state level 5 Sanction of loan RFC 60 Site approval/environmental Department of 6 clearance Environment 90 Adequacy certificate Rajasthan State Pollution Green category: 30 No-objection certificate Control Board Red category: 45 - Load upto 60HP:issue of demand notice 21days Release of connection:30 days from demand notice - Load from 60HP-300KW:Demand notice 30 days Release of connection 60 days from demand notice 7 Release of power connection notice - Load above 3,000KW:issue of demand notice 60 days Release of connection 90 days from issue of demand notice Rajasthan State - Load 300-3,000KW:issue of demand notice 60 days Electricity Board Release of connection 75 days from issue of demand Source: IBEF Investment Facilitation Rajasthan State Industrial Development and Investment Corporation (RIICO) provides services relating to site selection and acquisition of land, financial assistance to small, medium and large scale projects, equity participation in large projects on merit. It also provides technical consultancy for project identification and technical tie up, escort services, facilitation of government clearances, merchant banking and financial tie ups and extending incentives and concessions according to the policy of state government. The State Bureau of Industrial Promotion, nodal agency of the Government of Rajasthan, facilitates investments by providing one-stop service mainly for large projects (above Rs 10 Crores). It acts as an interface between entrepreneurs and the government, for grant of speedy clearances and redressal of issues. Investment Climate - A Report on Northern States of India 46

51 UTTAR PRADESH Maximum Time Limit for decision in respect of Sanction/No Objections/Licence etc., to be granted to entrepreneurs in Uttar Pradesh is as following Timeline of various clearances required for setting up a manufacturing unit in Uttar Pradesh S.No. Department/Agency Clearance Maximum Time Limit (in months) (a) Issuance of provisional registration of Small Scale Industries including the grant of No-Objection Certificate for 220 types of non - polluting Small Scale Industries. 1 Directorate of Industries Uttar Pradesh State 2 Electricity Board (b) Permanent Registration of Small Scale Industries, which includes the grant of pollution control consent certificate to non-polluting Small Scale Instant/Same day Industries. The application of the industry for consent from Pollution Control Board would be received by the nodal officer of Board at District Industries Centre issuing acknowledgement whereafter the pollution control consent will also be incorporated in the permanent registration certificate of the Small Scale Industries of the above mentioned category. (a) Sanction of power load for construction 1 (b) Sanction of power load for production 1 (a) Issuance of No-Objection Certificate: 1. For 29 types of highly polluting industries 4 2. For industries other than those mentioned above and other than 220 types of non-polluting Small Scale Industries. 1 Uttar Pradesh Pollution 3 Control Board 4 Trade Tax Department (b) Grant of Constant For 29 types of highly polluting industries 4 Acknowledgement For Small Scale Industries other than those the category mentioned above of application forms itself is "consent" For low-polluting medium and large industries other than those of 29 1 types as mentioned above (a) Temporary registration of Trade Tax Three days (b) Permanent registration of Trade Tax Thirty days (c) Inspection report for Trade Tax exemption/deferment. Thirty days (d) Decision at Commissioner's level after submission of inspection report Thirty days for Trade Tax exemption/deferment. (a) Approval prior to construction of factory building/use as a factory 5 Labour Department (1) For non-hazardous industries 1 (2) For hazardous and major hazardous industries. Sixty days (b) Registration/Licence under the Factories Act. (1) For non-hazardous industries 1 (2) For hazardous and major hazardous industries. Sixty days (3) Registration as Shop and Commercial Establishment. 1 6 Fire Department No-Objection relating to fire safety from Fire Officer 1 7 Revenue Department (a) Declaration of land as non-agricultural section-143 (b) Proceedings under section-154 of U.P. Zamindari Abolition Act. 1 Month, but the rule of deemed approval will not be applicable 47 Investment Climate - A Report on Northern States of India

52 8 Grant of Licence from Ten days Food Deptt. 9 Permission/No-Objection 1 month, but the from District Magistrate's rule of deemed level for storage of HSD. approval will not be 10 Drug Controller (a) No-Objection for grant of licence 1 (b) Drug licence (after establishment) 11 State Excise Department (a) Allotment assurance from State Excise Department 1 applicable Sixty days (b) Excise Licence 1 12 Forest Department No-Objection from Divisional Forest Officer (for industries based Sixty days on forest) 13 Electrical Safety No-Objection for Electrical Safety 1 Directorate 14 Permission Urban 2 Land Ceiling Act 15 Building Map approval by Development Authority / Municipal Corporation / 1 Municipality / Town Area or notified area Source: Nivesh Mitra, Government of Uttar Pradesh Investment Facilitation On July 06, 2009, the state government launched a web-interface single window facility for entrepreneurs, 'Nivesh-Mitra' in 18 identified districts on pilot basis and a Web-enabled Single Table System for the remaining districts is already functioning. With an objective to facilitate faster and time-bound issuance of various, the web enabled software package provides for seamless interface between the entrepreneur and various departments such as issuing clearances/approvals/no objection certificates etc. for setting up of a project. UTTARAKHAND The procedural roadmap and timelines for obtaining various clearances and approvals for setting up an industry in Uttarakhand is given below Timeline of various clearances required for setting up a manufacturing unit in Uttarakhand S. No. Department /clearance Industries Department Acknowledgement of EM Part I including NOCs for 220 polluting industries Acknowledgement of EM Part II Power Corporation Sanction of power load for construction Maximum time limit (in months) Same day 5 days (as per MSME Act) 15 days Sanction of regular power load 1 Allotment of land/plot in SIDCUL/UPSIDC/Industrial Department/Industrial Areas and Estates 1 Investment Climate - A Report on Northern States of India 48

53 Environment & Pollution Control Board Issuance of NOCs - - Labour Department ( Factories Act) Approval for construction and use of factory building under Factories Act - - For polluting industries 4 For non polluting industries other than 220 non polluting industries for which DICs are authorised Grant of Consent - For polluting industries 4 - For non polluting industries other than 220 non polluting industries for which DICs are authorised - For medium and large industries other than highly polluting industries Trade Tax Department For non hazardous industries 1 For hazardous* and major hazardous industries 2 Registration/License under Factories Act - For non hazardous industries 1 - For hazardous* and major hazardous industries 2 Registration under Shops & Commercial Enterprises 1 Department of fire safety NOC for fire safety 1 Revenue Department Land use change under section Permission under abolition of Zamindari Act Sanction for purchase of land and permission for establishing industrial areas/estates under private/joint sector under ceiling/state Act (Deemed approval would not be applicable in land related applications) Receipt of application to be considered as consent Temporary registration under trade tax 3 Permanent registration days 1 9 License from Food and Supply Department 10 days 10 Permission /NOC for HSD explosives & inflammables Storage Health Department Drug and Cosmetic Licenses 2 State Excise Department NOC for storage of excisable items (such as methanol etc) 1 Licenses for establishing distillery (deemed approval not applicable) Forest Department NOC from Forest Department ( for some forest raw material based industries) Approval of Factory building maps by State Industrial Development Authority/different local development authorities Source: Department of Industries, Government of Uttarakhand Investment Climate - A Report on Northern States of India

54 Investment Facilitation State Industrial Development Corporation of Uttarakhand Limited (SIDCUL) is the nodal agency of the state to administer all existing Government of India and Government of Uttarakhand schemes for Industrialization and Industrial Promotion. It provides the industrial units with the requisite information and directs them about the approvals needed for potential investors. It also provides finance, infrastructure, ensures development, technology up-gradation for setting up of high technology pollution free industries. SIDCUL ensures the speediest clearances to enable the shortest lead-time in setting up industrial projects. The corporation administers all promotional schemes of the government for industries and administers the Single Window System. The state government has constituted Udyog Mitra Scheme for grievance redressal at the state and district level. 4.2 Cost of setting up business in the states Cost is a major consideration when a company chooses a location to set up business unit. The cost of carrying out business activity in an efficient manner has a direct bearing on the profitability of operating units. There are significant variations in various costs across states. This section aims to throw light on different costs including land costs, labour costs, which depends on the availability of labour. Basic infrastructure costs like power and logistics costs like transportation and warehousing also play an important role in assessing a state in terms of cost of doing business. The cost of doing business in the Northern states is given below DELHI The following table details major cost estimates of doing business in Delhi. Parameter Estimated major cost indicators of doing business in Delhi Land price (per sq ft) (Commercial land for office use or institutional land) Labour (per man-year) Lease rent (per sq ft) Residential rent (per sq ft per month) Water industrial (per 1,000 litres) Cost estimate US$ 65 to US$ 543 US$ 1,206 to US$1,333 US cents to US cents US 16.8 cents to US 68.8 cents US cents to US cents Sources: Asia Pacific Property Digest, 3rd Quarter, 2009, Jones Lang LaSalle, Delhi Government websites, industry sources Note: Exchange rate used is INR 47 per US$ HARYANA The following table details major cost estimates of doing business in Haryana. Estimated major cost indicators of doing business in Haryana Indicator Value (in US$) Industrial land (per sq mt) Office space rent (per sq ft per month) Gurgaon: Residential rent (for a 2,000 sq ft house, per month) star hotel room (per night) 80.4 Water (per 1000 litres) Commercial & Industrial: Source: PwC research Note: Exchange rate used is INR 47 per US$ Investment Climate - A Report on Northern States of India 50

55 HIMACHAL PRADESH The following table details major cost estimates of doing business in Himachal Pradesh Manufacturing Estimated major cost indicators of doing business in Himachal Pradesh Land (US$ / hectare)* Bidding process Labour Cost (US$ / man year)** 781 Services Occupation Costs*** (US$ / sq ft / year) 2.54 Employee Cost (US$ / man year)**** Software Developers 6,383 Team Leads 14,893 Architects 21,276 Project Managers 31,915 Content Source: Government Website, Note: Exchange rate used is INR 47 per US$ * Land in Himachal Pradesh is sold in a bidding process. ** Source: Indiastat.com *** This is for SSI units in the state **** KPMG Analysis on costing for an IT venture in India ***** Government of Himachal Pradesh offers reduced lending rates to the industry JAMMU & KASHMIR The following table details major cost estimates of doing business in Jammu & Kashmir. Manufacturing Estimated major cost indicators of doing business in Jammu & Kashmir Land (US$ / hectare) Labour Cost (US$ / man year worked) Services Occupation costs (US$ / sq ft / year) Employee Cost (US$ / man year) Software developers Team leads Architects Project managers Content Source: Note: Exchange rate used is INR 47 per US$ 58,421 2, ,020 12,241 16,946 26, Investment Climate - A Report on Northern States of India

56 PUNJAB The following table details major cost estimates of doing business in Punjab. Estimated major cost indicators of doing business in Punjab Indicator Industrial land (per sq mt) Office space rent (per sq foot per month) Residential rent (for a 2,000 sq mt house, per month) 5-star hotel room (per night) Value (in US$) Water (per 1000 litres) Commercial & Industrial: 0.14 Source: PwC research Note: Exchange rate used is INR 47 per US$ Mohali Ludhiana Amritsar RAJASTHAN The following table details major cost estimates of doing business in Rajasthan. Indicator Industrial land (per sq mt) Estimated major cost indicators of doing business in Rajasthan Value (in US$) Jaipur Kota-4-10 Udaipur-2-10 Office space rent (per sq ft per month) Jaipur Residential rent (for a 2,000 sq ft house, per month) 5-star hotel room (per night) 50 Water (per 1000 litres) Source: Note: Exchange rate used is INR 47 per US$ 500 UTTAR PRADESH The following table provides major cost estimates of doing business in Uttar Pradesh. Cost parameter Industrial land (per sq m) Office space rent (per sq m per month) Labour (per day) Estimated major cost indicators of doing business in Uttar Pradesh Cost estimate US$ 2,000 to US$ 2,575* US$ 3 to US$ 25^ US$ 1 to US$ 1.5 Unskilled: US$ 2.17 to US$ 2.81 Semi-skilled: US$ 2.28 to US$ 3.21 Skilled: US$ 2.39 to US$ 3.56 Sources: Industry sources, Labour Department, Uttar Pradesh*Government land in key industrial areas of Noida and Greater Noida.^Agricultural land Note: Exchange rate used is INR 47 per US$ Investment Climate - A Report on Northern States of India 52

57 UTTARAKHAND The following table provides major cost estimates of doing business in Uttarakhand. Manufacturing Estimated major cost indicators of doing business in Uttarakhand Land (US$ / hectare) Labour Cost (US$ / man year worked) 99,183 1,593 Services Occupation Costs (US$ / sq ft / year) 11 Employee Cost (US$ / man year) Software developers Team leads Architects Project managers 4,722 13,782 18,541 28,586 Source: Sidcul, Indiastat, Note: Exchange rate used is INR 47 per US$ Observations and Conclusions The state governments by and large have been responsive to the needs and the necessity of ushering in an investor friendly environment. All the state governments in the Northern region have laid down time frames for various clearances, have set up single windows and set up nodal agencies for industrial infrastructure. However, the issue is that of implementation. While most of the Northern region states have well defined time bound clearances for projects, however adherence to these timelines remains an issue. Efforts need to be made towards more effective implementation. Use of information technology for the same can help in bring speed and transparency in grant of various clearances. 53 Investment Climate - A Report on Northern States of India

58 Chapter 5 LABOUR REGULATIONS & INDUSTRIAL RELATIONS Under the Constitution of India, labour is a subject in the concurrent list where both the central and state governments are competent to enact legislations. As a result, a large number of labour laws have been enacted catering to different aspects of labour. The categorization of labour laws is shown in Annexure 1. Besides, both central and state governments have formulated rules to facilitate implementation of these laws. Labour regulations relating to setting of norms for employment, hire and fire operations, employment of contract labour etc. have a major bearing on industrial productivity and largely influence investment decisions. The restrictions on hiring and firing of workers are identified as a major challenge in doing business. The legal basis for the regulation is encoded in the employment security provisions of the Industrial Disputes Act (1947), the service rules provision of the Industrial Employment Act (1946) and the provisions of the Contract Labour (Abolition and Regulation) Act (1970). Another correlated factor is the prevailing work culture / industrial environment / political governance in the state. Active Labour Market Programmes and Policies (ALMPs), as recommended by the International Labour Organization and other bodies internationally, are starting in India and may need to be strengthened. Amending the plethora of existing labour regulations is itself an integral part of the job-creating ALMP strategy for India. An improvement in labour regulations, spurred at individual state level within a central enabling framework, will provide an opportunity to accelerate manufacturing growth and especially employment in key labor-intensive sectors. The Northern region provides a peaceful business environment with cordial labour and industrial relations. The following table highlights the prevailing industrial relations in northern states/uts in terms of man days lost due to industrial disputes. It can be observed that there has been a continuous improvement in majority of states over time. State-wise man days lost, resulting in work stoppages due to industrial disputes States/UTs Chandigarh Delhi Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan 1,332 1,927 1, Uttar Pradesh Uttaranchal India 23,866 29,665 20,324 27,167 Source: IndiaStat.com Investment Climate - A Report on Northern States of India 54

59 CHANDIGARH The labour department in Chandigarh has been successful in maintaining industrial peace and cordial relation between the workers and employers owing to proper enforcement of about two dozen labour enactments. Under the Industrial Disputes Act, 1947, the Assistant Labour Commissioner has been declared as Conciliation Officer. In case of any strike, lay off or lock out for which an intimation is received in this office or if there is any apprehension of industrial unrest, the Conciliation Officer immediately intervenes in the matter and to settle the dispute. As per the Punjab Shops and Commercial Establishments Act, 1958, the Assistant Labour Commissioner is Chief Inspector of Shops and Competent Authority to make the challans and sanctions the challans in respect of inspection made by the Inspectorate staff. The act regulates the working conditions of the workers in the shops and commercial establishments. The said act specifies opening and closing, rest intervals and close days in respect of such establishments. Chandigarh Labour Welfare Board functions under the control of the labour department. DELHI Delhi has been a state with minimal labour unrest, in terms of mandays lost due to labour unrest. The functional powers of the labour department are being exercised by the conciliation machinery and other inspectorates at the grass-root level. Industrial disputes are settled by conciliation failing which the matter is referred to the adjudication machinery. The rights of workers are protected by enforcement of various provisions of labour laws. The laws relating to safety in industries are being enforced by the (i) Inspectorate of Factories, (ii) Inspectorate of Boilers and (iii) Electrical Inspectorate. Delhi Shops & Establishments Act, formulated by Government of Delhi is being enforced for the regulation of working conditions of employees regarding hours of work, payment of wages, leaves, holidays, terms of service and other service conditions of workers. The coverage provided by this act extends to persons employed in shops, commercial establishments or public entertainment and amusement places. The Industrial Employment (Standing Order) Act, 1946 makes it obligatory for employers of an industrial establishment with 100 or more workers to clearly define the conditions of employment. This should be done by way of standing orders/services rules and should be made known to the workmen employed. However in Delhi, the act applies to an industrial establishment where 50 or more workmen are employed or were employed in the preceding 12 months. HARYANA Haryana is amongst the first few states to have come out with a comprehensive Labour Policy, 'State Labour Policy-2006' to create cordial relations between the employer and the employee. The policy has also set an objective to foster peaceful and in-house settlement of disputes, by progressively narrowing down the areas of conflict and maintain industrial peace in the state, so that there are no strikes or lockouts. A few initiatives taken by the government in this behalf are as under: i) Filing of a single return in respect of five labour laws. ii) Delegation of powers at the field level for clearances under the Contract Labour (Regulation & Abolition) Act Investment Climate - A Report on Northern States of India

60 iv) Focus on improvement in the working of ESI hospitals. v) Online registration of shops and commercial establishments to curtail unnecessary inspections. State government initiatives to foster cordial labour relations are discussed as under State Government Initiatives Government is encouraging to set up Works Committees under the Industrial Disputes Act, 1947 to solve day to day problems between workers & managements in a friendly spirit. Government has revised the minimum rates of wages of unskilled workers to Rs per day (w.e.f January 1, 2011). To raise the standard of living of workers and their dependents, Government of Haryana has constituted a Labour Welfare Board under the Labour Welfare Fund Act, HIMACHAL PRADESH The Himachal Pradesh government has setup two Labour Courts-cum-Industrial Tribunals at Shimla and Dharamsala under Industrial Disputes Act, 1947 for adjudication of industrial disputes. The conciliation mechanism has proved very effective in stopping and sorting out industrial disputes in the state. There are 10 Labour Officers at District HQ and 1 each at Rampur & Baddi who are functioning as Conciliation Officers. Elsewhere the District Employment Officers and Labour Inspectors (where the number of workers is less than 200) are liable to carry out this function. Among the key state laws, the Himachal Pradesh Shops and Commercial Establishments Act, 1969 (Amended Act 2004) provides for regulation of conditions of works and employment in shops and commercial establishments. State Initiatives According to Section 23 of the Industrial Disputes Act, 1947, applicable to industries, which are not Public Utility Services, in terms of Section 2 (n) read with the 1st schedule, workmen can go on lightning strike even without a single day's notice, and also when the Conciliation Officer has already commenced the conciliation proceedings. Section 40 (1) empowers the government to add industries in the 1st schedule, by a simple notification in the official gazette. The state government, through this process, has amended the 1st schedule, from time to time. It would, therefore, require workmen to give 14 days notice before going on strike. Licensing & Registration as required under the Contract Labour (Regulation and Abolition) Act, 1970, can also be done at the district level in a time bound manner and within 30 days of applying for registration and license. JAMMU & KASHMIR As per the Central Labour Laws (Extension to Jammu and Kashmir) Act, 1970, the acts mentioned in the schedule and all rules, orders, regulations and schemes enacted by the central government have been extended to the state of Jammu and Kashmir. Also, with effect from the commencement of this act, the acts mentioned in the schedule shall be amended as specified therein. Investment Climate - A Report on Northern States of India 56

61 PUNJAB In Punjab, the labour department has been put under the overall control of the Labour Commissioner who is also Chief Inspector of Factories. At present, the labour department of Punjab implements 22 central and 5 state acts. The labour department has been successfully holding conciliation proceedings for settlement of industrial disputes. It has also been entrusted the duty to decide on quasi-judicial cases under various labour laws, conducting inspections under various labour laws, implementing awards/orders of labour courts/industrial tribunals, issues registration certificate/licenses under various labour laws. Despite a significant reduction in number of disputes raised, the number of disputes referred to the industrial tribunal/labour courts has not decreased. RAJASTHAN Rajasthan has a favourable industrial relations environment ensuring smooth business operations. Also, the law & order situation in the state ensures good working environment. Labour courts and industrial tribunals in Ajmer, Alwar, Bharatpur, Bhilwara, Bikaner, Sriganganagar, Jaipur, Jodhpur, Kota and Udaipur have been entrusted with the responsibility of maintaining industrial peace and settling disputes in a cordial manner. A total of 10 labour welfare centres are working in Rajasthan. State Government Initiatives To provide workers/labourers of Rajasthan residential houses on low rent, Industrial Housing Scheme was started in 8 cities of Rajasthan. Later it was decided by the government to give ownership of these houses to workers living in them. This is seen as a major development in ensuring labour welfare and has contributed significantly to the betterment of industrial relations. UTTAR PRADESH The Labour Commissioner Organization of UP administers and enforces 33 labour laws (24 are central legislations and 9 state legislations). The organization seeks to achieve this objective through enforcement of various labour laws. The state has 6 industrial tribunals and 20 labour courts to adjudicate the cases relating to industrial disputes. These courts/tribunals are constituted by the state government under the provisions of the UP Industrial Dispute Act State Initiatives In the Industrial and Service Sector Investment Policy, 2004, a compliance oriented system, based on implementation of various core issues of labour laws, has been evolved taking in account of views from concerned stakeholders. This compliance oriented system is so designed that it promotes the industrial development and ensures the core legal benefits to the workers guaranteed under various problems labour laws. UTTARAKHAND The labour department of Uttarakhand is entrusted with enforcement of the labour laws and maintaining industrial peace and settlement of industrial disputes by conciliation and arbitration. 57 Investment Climate - A Report on Northern States of India

62 The industrial policy of Uttarakhand has laid due emphasis on simplification of labour laws. The state government aims to simplify labour laws in such a manner so as to create conducive atmosphere for industrialisation while protecting the interests of the workers. System of self-certification and amalgamation of returns has been put in place so as to substantially decrease the paper work. With a view to end harassment, the entire regime of inspections has been rationalised to ensure that they are corrective rather than punitive in nature. ENFORCEMENT OF THE LABOUR LAWS The enforcement of the provisions of various labour laws has been prescribed under provisions of the relevant acts and is secured through the officers of the Central Industrial Relations Machinery (CIRM) in the central sphere, and through the state enforcement machinery in the state sphere. Some of the labour enactments are also enforced by the Employees State Insurance Corporation and Employees Provident Fund Organisation. In the event of detection of any case of violations of the provisions of the labour enactments, show cause notice is issued to the erring employer with a direction to rectify the irregularity within a stipulated period. In case of noncompliance of such directions, there are the provisions of prosecution in the acts against the defaulting employers. In addition, special inspection drives are also undertaken for ensuring effective implementation of these Acts. To stop negligence on the part of Insurance Inspector/Social Security Officers, a system of reinspection of the units has been adopted by the Employees State Insurance Corporation and a project for computerization for achieving transparency in all it's activities has also been initiated. Labour Law Environment Index This index measures the legal, regulatory and procedural regime at the state level and how it facilitates the smooth functioning of labour markets. Variables such as labour relations environment, stringency of laws such as Shops and Establishments Act, Industrial Disputes Act, etc. are included. The following table shows the ranking of 1 Northern states among the 19 major states of India. States 2005 Rank 2009 Rank Haryana 6 7 Delhi 5 8 Rajasthan Punjab 3 12 Himachal Pradesh Source: India Labour Report 2009, TeamLease and IIJT The Northern region has fared relatively low in the ranking of states according to their respective labour law environment as per the criterion defined in Annexure 2. Among the 19 states analyzed for their labour law th th environment, only two Northern states, Haryana (7 ) and Delhi (8 ), appear in the top ten categories. Also, it can be observed that the overall performance of Northern states as per the labour law environment index has been deteriorating for most of the states. Except for Rajasthan and Uttar Pradesh, the performance of Northern states has either stagnated or declined over the last few years. With majority of Northern states on the lower end of the ranking, there remains a lot of scope to improve the labour and industrial relations under the purview of an enabling regulatory framework. 1 The analyzed States included Maharashtra, Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Haryana, Delhi, Goa, Kerala, Rajasthan, Punjab, Himachal Pradesh, Orissa, Uttar Pradesh, Assam, Bihar, Jammu & Kashmir and West Bengal (ranked in that order). Investment Climate - A Report on Northern States of India 58

63 Annexure 1 Categorisations of Labour Laws (a) Labour laws enacted by the central government, where the central government has the sole responsibility for enforcement 1. The Employees' State Insurance Act, The Employees' Provident Fund and Miscellaneous Provisions Act, The Dock Workers (Safety, Health and Welfare) Act, The Mines Act, The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare (Cess) Act, The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund Act, The Mica Mines Labour Welfare Fund Act, The Beedi Workers Welfare Cess Act, The Limestone and Dolomite Mines Labour Welfare Fund Act, The Cine Workers Welfare (Cess) Act, The Beedi Workers Welfare Fund Act, The Cine Workers Welfare Fund Act, 1981 (b) Labour laws enacted by Central Government and enforced both by Central and State Government 13. The Child Labour (Prohibition and Regulation) Act, The Building and Other Constructions Workers' (regulation of Employment and Conditions of Service) Act, 1996) 15. The Equal Remuneration Act, The Industrial Disputes Act, The Industrial Employment (Standing Orders) Act, The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, The Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, The Maternity Benefit Act, The Minimum Wages Act, The Payment of Bonus Act, The Payment of Gratuity Act, The Payment of Wages Act, The Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act, The Building and Other Construction Workers Cess Act, The Apprentices Act, 1961 (c) Labour laws enacted by Central Government and enforced by the State Governments 28. The Employers' Liability Act, The Factories Act, The Motor Transport Workers Act, Investment Climate - A Report on Northern States of India

64 31. The Personal Injuries (Compensation Insurance) Act, The Personal Injuries (Emergency Provisions) Act, The Plantation Labour Act, The Sales Promotion Employees (Conditions of Service) Act, The Trade Unions Act, The Weekly Holidays Act, The Working Journalists and Other Newspapers Employees (Conditions of Services) and Miscellaneous Provisions Act, The Workmen's Compensation Act, The Employment Exchange (Compulsory Notification of Vacancies) Act, The Children (Pledging of Labour) Act, The Bonded Labour System (Abolition) Act, The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 (d) There are also labour laws enacted and enforced by the various state governments which apply to respective states. CHANDIGARH 1. Punjab Shops and Commercial Establishments Act, 1958 DELHI 1. The Delhi Shops & Establishment Act, The Punjab Industrial Establishment (Casual, Sick Leave & Festival) Act, (as extended to Delhi 1965) HARYANA 1. The Punjab Shops and Commercial Establishments Act, The Punjab Industrial Establishments (National and Festival Holidays and Casual and Sick Leave) Act, The Punjab Labour Welfare Fund Act, The Punjab Industrial Housing Act, 1956 (Notification is issued by Housing Department) HIMACHAL PRADESH 1. Himachal Pradesh Shops and Commercial Establishment Act, HP Industrial Establishments (National & Festival Holidays, Casual & Sick leave) Act, 1969 PUNJAB 1. Punjab Factories Rule, Punjab Building and Other Construction Workers (RECS) Rules, Contract Labour (Punjab) Rules, Punjab Shops and Commercial Establishments Act, The Punjab Labour Welfare Fund Act, 1965 Investment Climate - A Report on Northern States of India 60

65 UTTAR PRADESH 1. The UP Dookan Aur Vanijya Adhisthan Adhiniyam, The UP Employment of Substitute Workmen Act, The UP Industrial Dispute Act, The UP Industrial Establishments (National Holidays) Act, The UP Industrial Peace (Timely Payment of Wages) Act, The UP Industrial Undertaking Special Provisions for Prevention of (Unemployment) Act, The UP Labour Welfare Fund Act, The UP Sugar and Power Alcohol Industries Labour Welfare and Development Fund Act, The UP Industrial Housing Act, The UP Public Premises (Eviction of Unauthorized Occupants) Act, Investment Climate - A Report on Northern States of India

66 Annexure 2: Labour Law Environment Index S. No. 1 Normalized Variables or Measures Average wages of registered workers by Minimum wages for lowest daily paid workers. 2 Inverse of Lockouts per Unit 3 Inverse of Strikes per Unit Inspections made under Shops & Establishment Act by Prosecutions launched Cases disposed Off by the Courts under Shops & Establishment Act by Prosecutions launched Inverse of Employee instituted Labour cases divided by total Labour related cases Inverse of Total Appellant Cases related to Labour laws divided by No. of Organized sector Employees 8 Net Transaction Cost Reduction Source: India Labour Report 2009, TeamLease and IIJT Variables Minimum Wages*300 Average wages of registered workers No of Units No. of Lockouts No of Units No. of Strikes Inspections made (Shops & Estab. Act) Prosecutions Launched (Shops & Estab. Act) Cases disposed off by the Courts (Shops& Estab. Act) Prosecutions Launched (Shops& Estab. Act) Total Cases (Management & Employees as Appellant) No. of Cases with Employees as Appellant Total Employees Total Employees Total Cases (Management & Employees as Appellant) Net transaction cost reducing changes to the Industrial Disputes Act Investment Climate - A Report on Northern States of India 62

67 Revenues of the states can be broadly divided into two heads tax revenue and non tax revenue. Major sources of tax revenue at the state level are sales tax, state excise on alcohol, stamp duties and registration fees, motor vehicles tax, property tax, land revenue etc. Non tax revenues include mineral and forest royalties, fines and fees or user charges for public goods and services. Implementation of VAT (Value Added Tax) Chapter 6 STATE TAXES Tax reforms by the state governments in recent years mainly focused on simplification and rationalisation of both direct and indirect taxes aimed at augmenting tax collection, removal of anomalies in the tax structure, improvements in tax administration and modernisation of the tax collection process through computerisation. The most significant tax reform that has been implemented by the state governments relate to the introduction of VAT (Value Added Tax) in lieu of state sales tax. VAT was introduced in 21 states on 1 April 2005 a crucial reform considering that sales taxes represented at the time more than 60% of state tax revenues. At the later stage, many other states implemented VAT. All the Northern states / UT have implemented VAT. VAT has made the tax structure simpler by reducing the number of prevalent tax rates and minimising tax concessions. The implementation of a uniform VAT rate eliminated some of the cascading effects caused by local taxes in the pre VAT regime. During the pre VAT regime, CST (Central Sales Tax) was levied at the rate of 4%. The rate of CST was reduced to 3% with effect from April 2007 and further to 2% with effect from April While this constituted a major relief for Indian business since CST forms a major part of total taxes, the implementation of VAT turned out to be a buoyant source of revenue for all the states. The table below depicts the composition of own tax receipts for the Northern states. Composition of Own Tax Receipts (RE) (Figs in %) State TI TPT & E TP SRF LR DT SST/VAT SET TV IDT OTR = =7+11 Haryana Himachal Pradesh Jammu and Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand All States TI : Taxes on Income TPT& E : Taxes on Professions, Trade, Callings and Employment TP : Taxes on Property and Capital Transactions SRF : Stamps and Registration Fees LR : Land Revenue DT : Direct Taxes SST : State Sales Tax VAT : Value Added Tax SET : State Excise Tax TV : Taxes on Vehicles IDT : Indirect Taxes OTR : Own Tax Revenue ' ' : Nil/Negligible Source: Budget Documents of the State Governments 63 Investment Climate - A Report on Northern States of India

68 VAT constituted 54.6% of Own Tax Revenue (OTR) of Rajasthan followed by Haryana (53.3%), Jammu & Kashmir (52.2%). On the other hand it constituted only 37.1 % of OTR of Uttar Pradesh. State excise constituted only 10.4% in Jammu & Kashmir followed by Haryana (10.7%). Property taxes and stamps and registration fees constitute a significant proportion of OTR of Uttar Pradesh, Uttarakhand and Punjab. Source: Local Taxes VAT across Northern States & UTs State/UT Existing VAT Rates Rate Revision Chandigarh 5% / 12.5% Increase in VAT wef Delhi 5% / 12.5% Increase in VAT wef Haryana 5% / 12.5% Increase in VAT wef Differences in local taxes are considerable mostly due to different rates in property, vehicle, profession and municipal taxes. Octroi and property tax are the main contributors to the municipalities' tax income. Himachal Pradesh has introduced Entry Tax under the Himachal Pradesh Tax on Entry of Goods into Local Area Act It levies entry tax at a rate ranging from 1% 12% on host of goods. Amendments have also been made to enhance the coverage of goods under the Act. Also, Government of Punjab levies entry 4% under the provisions of Punjab Tax on Entry of Goods into Local Areas Act, Property Tax is the principal source of revenue for urban local bodies/local municipal authorities for the maintenance of the basic civic services in the city. Property tax is an obligatory tax levied on all lands and buildings. In Delhi, a Geographic Information System cell is being set up for better management of property tax. Rajasthan Government has introduced a new system of property tax in 2007 in urban areas of the state, replacing the house tax. Himachal Pradesh 5% / 12.5% Increase in VAT wef to 5% Punjab In line with the general principle of moderate taxes, Northern states of Haryana, Rajasthan and Uttarakhand have reduced the rate of Stamp Duty on sale of land/property in urban and rural areas. Tax Administration During 2010, Union Cabinet decided to computerise the treasuries of all states to enhance the efficiency and transparency of various state governments' financial administration. The system in place will enable the state treasuries to share data with the Reserve Bank of India, various banks and the central plan schemes monitoring system of Controller General of Accounts. 5% / 12.5% (10% Addl Tax/Surcharge) Rajasthan 5% / 14% Uttar Pradesh (4%+0.5%+0.5%) / (12.5%+1%) Uttarakhand 4%+0.5% / 12.5%+1% Increase in VAT wef & Addl Tax wef Increase in VAT wef for 12.5% and Increase of 4% to 5% wef Additional Cess wef /Additional Cess of (4+0.5%)+0.5% wef Surcharge of (4+0.5%) & 12.5%+1% wef postponed An integral part of reforms undertaken by the state governments are related to measures to strengthen tax administration. Chandigarh Excise and Taxation Department has made efforts for computerisation of all the records enabling the dealers to have an access to information related to returns filed, payments of tax made and verification of encashment of cheques/drafts etc. In Delhi, the major initiative was mission mode project for Investment Climate - A Report on Northern States of India 64

69 computerisation of commercial taxes administration. The main features of the project for the benefit of the dealers are following 1. E-Registration: Online registration, online query submission (e-query), online submission and receipt of response. 2. E-Return: Extending online return filing by dealers to other areas like composition scheme, etc. through password-protected access initially & thereafter with digital/e-signature. 3. Regular display of up to date information related to pending assessments, cases and appeals on portal. 4. E-Refund: Facility for tracking of status and transfer of refund amount to the bank account of the assessed cases electronically. 5. E-objection filing: This can be exposed through web so that a visit to DTT can be avoided. 6. E-Payment of taxes through at least 5 banks. 7. E-Forms: Online issue, processing and submission of most of the forms including C forms and their utilization accounts. 8. Grievance Redressal: Online filing of complaints and its processing, including its status tracking and redressal. 9. Web-exposed Dealer Ledger Account: Maintain a dealer ledger for each dealer registered with the department. 10. Facility to file, update and capture phone/mobile numbers and addresses of assesses. 11. Display of all Acts, Rules, Notifications, Orders, Clarifications etc. on Portal. 12. Notices/alerts via /SMS to dealer. Source: Department of Trade and Taxes, Government of NCT of Delhi Haryana has implemented Value Added Tax Management, Assessment, and Collection System (VAT Macs). It includes modules like VAT return processing, dealers registration, fact sheet compilation, statuary forms inventory and road side checking. The state also has an integrated cyber treasury system, which has made significant contribution to the tax administration. Integrated Cyber Treasury System of Haryana Cyber Treasuries is a net banking solution for online payment of Commercial Taxes for the dealers of Haryana. The Finance Department in association with SBI provides for online payment of commercial taxes to the dealers, having accounts in the SBI Branches linked with core banking solutions. NIC Haryana was entrusted with the task of development of website of Treasuries and Accounts and cyber treasury software. On-Line Treasuries Information System (OTIS) has been implemented at 100% treasuries & Sub treasuries (103 sites). This concept of Cyber Treasuries is to facilitate high networth taxpayers, a payment gateway interface with SBI online. Punjab has launched various tax policy and administration reforms. The state government is targeting better contingent liability management with the objective to improve tax policy, administration structure and increase its own sources of revenue. The focus is on improving operational efficiency, enabling voluntary compliance and enhancing tax payer's convenience. Government of Punjab has already implemented the project on Computerisation of VAT Information System (COVIS). 65 Investment Climate - A Report on Northern States of India

70 Government of Rajasthan has taken a number of measures to improve tax compliance and administration including early VAT refunds, recovery of profession tax, reduction in penalty under VAT, relief to hotel dealers under VAT, extension of exemption on food grains and reduction/rationalisation of luxury tax in Rajasthan. The state government has proposed to set up Directorate of Revenue Intelligence to track sources of revenues and curb tax evasion. Tax facilitation centres are also planned to be set up at the level of each tax assessment officer. During the year 2006, Uttar Pradesh took initiatives to implement and spread e-governance through capacity building. Commercial Tax Department has been covered under the state e-governance project. To improve the quality of services, complete e-filing returns/computerisation of the sales tax departments have also been implemented in Uttarakhand. GST (Goods and Services Tax) The next major tax reform to be implemented is the GST (Goods and Services Tax) a comprehensive Value Added Tax on the supply of goods and services. Earlier, it was proposed to be introduced throughout the country from 1 April However, to build consensus among the various states and between the states and the centre, the implementation was delayed. The Constitutional Amendment Bill of GST was tabled in Parliament in the recent budget session. The bill seeks to amend the Constitution to authorize both the centre and the states to levy taxes on supply of goods and services. This bill is a culmination of three Draft Amendment Bills circulated by the central government the first draft dated 21 July 2010, the second draft dated 11 August 2010 and the third draft dated 28 January There is expectation that GST may get implanted by 1 April The proposed structure for GST is dual whereby a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of every transaction of supply of goods and services. It is proposed that the taxes to be subsumed under CGST will include 1. Central Excise Duty (CENVAT) 2. Additional Excise Duty 3. Excise Duty under Medical and Toiletries Preparation Act 4. Service Tax 5. CVD 6. Special Addl. Duty of Customs 4% (SAD) 7. Surcharges 8. Cesses The taxes to be subsumed under SGST will include 1. VAT / Sales Tax 2. Entertainment Tax (except of local bodies) 3. Luxury Tax 4. Lottery Taxes Betting and Gambling 5. State cesses and surcharges relating to supply of goods and services 6. Entry Tax not in lieu of octroi 7. Purchase Tax Investment Climate - A Report on Northern States of India 66

71 The Dual GST is expected to be a simple and transparent tax with one or two CGST and SGST rates. This is expected to result in Reduction of taxes at the central and state level Decrease in effective tax rate for many goods Removal of the current cascading effect of taxes Reduction in transaction cost of the taxpayers through simplified tax compliance Increased tax collections due to wider tax base and better compliance The CGST will be a common code throughout India. Further, each state will legislate its own enactment to levy and collect the SGST. A white paper has been released based on which each state will legislate. The expectation is that, a majority of the provisions will be uniform across the states. This uniformity will benefit business and will be viewed by investors as a healthy development. Likewise, these developments will also ensure that there will not be much to distinguish among states as far as fiscal incentives are concerned. Observations and Conclusions VAT is an important source of tax revenue to Northern states, with except UP and Uttarakhand having greater than all India average proportion of OTR revenues coming from VAT. VAT has also brought about greater harmonisation of rates amongst various states and also simplified the rate structure to a large extent. The next goal post is GST and its implementation at the earliest possible. Consensus building amongst the various state governments is a prerequisite for the same. 67 Investment Climate - A Report on Northern States of India

72 With the onset of the reform process in the country, state governments have been proactive in formulating policies and incentive schemes for different segments of industry for their respective states, keeping in view their competitive strengths as well as the requirements of future growth and development. These policies aim to induce investors to invest in various sectors in the state and thereby contribute to the overall development of the economy. This chapter dwells on the key industrial policies and incentives offered by the state governments in the Northern region. CHANDIGARH To promote industrial growth in Chandigarh, the administration has circulated a draft Industrial Policy inviting suggestions from industry. The objectives of the policy are to sensitize the administration to the needs of the industries, create congenial environment for the development of tiny, micro, small & medium enterprises and maximize production and achieve higher productivity through modernised and more efficient work techniques and optimum utilization of available resources. However, the draft Industrial Policy 2009 has so far not been implemented in the UT. Chapter 7 STATE GOVERNMENT POLICIES AND INCENTIVE SCHEMES FOR INDUSTRY DELHI Delhi has emerged as a leading service economy in the region with an immense scope for development of the service industries such as Banks and Financial Services Institutions (BFSI), IT and ITeS, consulting etc. The Government of Delhi announced Industrial Policy 2010 for the period of 10 years starting 2010 in alignment with Master Plan for Delhi The policy seeks to promote industrial growth in the desired sectors and also give new thrust and direction to industrial activity in the city. The policy also lays emphasis on development of the two SEZs at Bapola- one for gems and jewellery and other for IT & ITeS. The following are the guiding elements of the policy. i) Promotion of sophisticated industries which could achieve optimum level of production with less, space, power, water etc ii) iii) iv) Emphasis on encouraging non polluting industries Emphasis on promotion of Computer Software, IT/ITeS, Electronics and High-tech industries irrespective of investment limits No new industrial unit shall be permitted in residential areas except household industries v) A single unified agency for development and maintenance of industrial areas in Delhi vi) vii) The involvement of industrial association of the area in the maintenance of industrial areas shall be encouraged Low-tech industries to be encouraged to recycle into Hi-tech industries in industrial areas viii) Hazardous/obnoxious industries as well as large/heavy industries shall not be permitted in Delhi ix) Small scale industries graduating to the medium sector as a result of modernisation technical up-gradation shall be permitted provided there is no substantial expansion and where growth is in the same line or allied line, and where industry is operating in an approved industrial area Investment Climate - A Report on Northern States of India 68

73 HARYANA Haryana has emerged as a base for IT/ITeS, Auto and Biotechnology. Haryana government has formulated various sector specific policies from time to time to maintain conducive business environment. Recently, the government of Haryana announced its new Industrial and Investment Policy, It aims to promote private sector investments through PPPs and also plans to set up new industrial estates and industrial clusters in all districts. The detailed scheme of incentives and concessions of the policy is discussed as under Incentives for Mega Projects in Backward Areas 2 A mega project would be eligible for provision of a customised package of incentives including the ones listed below i) Financial assistance by way of Interest Free Loan (IFL) at 50% of the tax paid on the sale of goods produced for a period of 7 years from the date of start of commercial production and repayable after a period of 5 years from the date of grant of IFL. ii) Exemption from electricity duty to the new industrial units for a period of 5 years from the date of release of electricity connection. The sector-specific incentives are as following Incentives for Food Processing Industries i) IFL at the rate of 75% of the tax paid on the sale of goods produced for a period of 5 years from the date of start of commercial production and repayable after a period of 5 years; ii) iii) iv) New industrial units established would be exempt from payment of electricity duty for a period of 5 years; Change of Land Use (CLU) charges would be 50% of normal rates in respect of units established in the B and C category blocks; Units established in B & C category blocks will be entitled to 50% concession in the stamp duty for the purchased or leased land; v) No market fee would be charged on the vegetables and fruits grown in the state and consumed as raw material by the food processing industry located within the state; vi) Wines/liquors/brandy etc made from 100% fruits and barley produced in the state will be exempt from the excise duty in B and C category blocks; vii) No market fee would be charged on agriculture and horticulture produce used as raw material by food processing industries within the state except wheat, paddy, oil-seeds, guar, sunflower seed, till, toria, taramira and cotton. Bio-Technology The state government plans to set-up a high profile Bio-technology park in the state under the PPP mode. Such projects will be accorded the status of industry for the purpose of incentives under the Industrial Policy. Special priority would be given for release of electric connection to mega projects, 100% EOUs, IT industries and FDI projects. Special incentives for the SEZs In addition to the facilitation through land acquisition interventions by the government and the benefits available to the SEZs under the Central and State SEZ Acts, the state government has decided to extend following benefits 2 Projects involving a minimum fixed capital investment of Rs 100 crore and above, or having employment generation of more than 500 persons, and have the inherent potential for serving as anchor/mother units 69 Investment Climate - A Report on Northern States of India

74 regarding levy of External Development Charges (EDC) on the SEZ Projects. i) Not withstanding that a SEZ can have up to 50% of the Non-Processing Zone, the EDC rates for the SEZs would be as applicable for the industry sector; ii) Further, the EDC rates would be chargeable as under S. No. Category of SEZ EDC rates applicable 1 Multi-product SEZs involving an area of 1000 hectares or more 15% of the applicable EDC 2 Multi-services and other SEZs involving an area of 100 hectares or more but less than 1000 hectares 35% of the applicable rates of EDC 3 Single Product SEZs having area between 10 hectares to less than 100 hectares 50% of the applicable rates of EDC in respect of the area forming part of the Processing Zone and 100% in case of the area under non-processing zone. The state also has a well directed IT policy (2000) in place. Various incentives of the policy are as under Rebate on registration and transfer of property charges and exemption from stamp duty on a tapering scale shall be given for sale/ lease of built-up space to the IT Industry establishing facilities in private software technology parks (STPs), government STPs, and IT parks. IT software industry will be totally exempted from payment of sales tax. The sales tax rates on computers and computer peripherals to be 0.25%. Priority sector lending assistance by the state-level financial institutions to IT software and IT services. IT software industry exempted from the purview of No Objection Certificate and consent regime of the Haryana State Pollution Control Board, except in case of power generation sets of more than 10 Kilo Volt Ampere. Self-certification/exemption for the IT software industry to be permitted regarding requirement under various acts. HIMACHAL PRADESH The State Industrial Policy, 2004 aims to expand the industrial sector in the state, to develop infrastructure with lesser number of regulations and provision for speedy clearance of new projects and thus boost the confidence of the investors. During 2003, central government formulated the Special Package of Incentives for Himachal Pradesh. This package contributed significantly to the expansion of the industrial sector in the state. However, this 3 package (some components ) was prematurely withdrawn wef 31 March Some of the thrust industries as identified by the policy are pharmaceuticals, sports, floriculture, industrial gases, eco- tourism and a number of other industries. Various incentives have been announced in order to attract large scale industrial investments. Special package of incentives aimed at attracting new investments Facilities to new and existing industrial units that are set up in growth centres, industrial infrastructure development centres, industrial estates, export processing zones, theme parks 100% income tax exemption for initial period of five years, and thereafter, 30% for companies and 25% for others for a period of five years from the date of commencement of commercial production. 3 The excise exemption has expired on 31 March The Income Tax exemption expires on 31 March 2011 and the Central Capital Investment subsidy is available till 31 March 2013 Investment Climate - A Report on Northern States of India 70

75 15% capital investment subsidy to all new industries set up in notified locations of their investment in plant and machinery, subject to a ceiling of Rs 30 lakhs. Same concessions are applicable to thrust sector industries. Provision of power and sales tax concessions subject to certain conditions. 4 Additional incentives to special category of entrepreneurs for setting up of new industrial enterprise(s) in micro and small sectors Reimbursement of 90% expenditure incurred towards the cost of preparation of feasibility report with a ceiling of Rs 25, 000/- in each case. 100% subsidy on the carriage and installation cost of the plant and machinery. Interest 5% on term loan availed from the financial institution(s) as per original repayment schedule with a ceiling of Rs 50,000 p.a. for a period of 3 years. Preferential allotment of land at concessional rates. Exemption of state excise duty for a period of 7 years to new thrust industrial enterprises set up as MSME. Incentives for New Thrust Industrial Enterprises based on Horticulture/Vegetable /Maize/ Herbal produce enterprises Total exemption from the payment of electricity duty for a period of 10 years from the date of commencement of production. Interest % p.a. on term loan, with a ceiling of Rs 2 lakhs p.a. for a period of 3 years. Scheme of Incentives, Concessions and Facilities are same as provided to other industrial enterprises for Biotechnology related thrust enterprises. Additional benefits include: Allotment of land/plot/ industrial of the normally applicable premium as may be determined by the government from time to time for the general category of industries. Interest p.a. on term loan, with a ceiling of Rs 2 lakhs p.a. for a period of 3 years. In-principle approval being given to extend the package of the policy by one year, after its expiry in March Among the key sectoral policies, the state also has Tourism and Hydro Power Policy. Tourism Policy: Key Incentives 3% interest subsidy on the prevailing term lending rate. Subsidy on Building and Plant & 15% or maximum Rs 30 lakhs. Hydro Power policy 2007: Key Incentives Himachal Pradesh Power Corporation Limited to purchase power at US$ 0.05 per kwh for projects up to 5 MW. Banking and wheeling facilities are permitted at 2% including transmission losses. 5 year moratorium on payment of electricity duty for self consumption of electricity. JAMMU & KASHMIR The Industrial Policy, 2004 will remain effective till The policy aims at increasing the rate of growth, value of output, employment, income and overall economic development of the state. 4 "Special Category of Entrepreneurs" means entrepreneurs belonging to the Scheduled Caste, Schedule Tribe, Women, Ex-serviceman, Physically Handicapped person (with the level of disability as notified by the Government from time to time), Below Poverty Line category who set up Industrial Enterprise(s) themselves. 71 Investment Climate - A Report on Northern States of India

76 List of incentives under the Industrial Policy 2004 are delineated as under. S. No Incentive Maximum limit The current rates of premium are as follows For land/plot not exceeding 4 kanals A Class - 60,000/- B Class - 45,000/- C Class - 30,000/- For land/plot not exceeding 8 kanals. A Class - 90,000/- B Class - 67,500/- C Class - 45,000/- 1 Land Allotment For land/plot not exceeding 20 kanals A Class - 1,20,000/- B Class - 90,000/- C Class - 60,000/- 2 Capital investment subsidy (CIS) For land /plot exceeding 20 kanals A Class - 1,20,000/- B Class - 90,000/- C Class - Cost of acquisition of land plus cost of development plus 10% surcharge 30% capital investment subsidy is available to industrial units in backward blocks subject to the following ceiling a) Rs lakhs for general category b) Rs lakhs for units under thrust area category c) Rs lakhs for units under prestigious category d) Rs lakhs for units under both thrust area and prestigious category In case of blocks other than industrially backward blocks, the new industrial units shall be eligible for CIS only under the central scheme. However, in case of blocks other than backward blocks, if the eligible amount of CIS under the central scheme exceeds Rs 30 lakhs, which is maximum limit under that scheme, the state government shall provide the amount exceeding Rs 30 lakhs subject to a ceiling of Rs 15 lakhs, Rs 30 lakhs and Rs 45 lakhs, in case of thrust area units, prestigious units and prestigious units in thrust areas, respectively. 3 Interest Subsidy 4 DG Set subsidy For construction of a captive tube well or building a captive lifting plant, 75% subsidy shall be allowed to prestigious units in thrust areas subject to a ceiling of Rs lakhs. In addition to the 3% interest subsidy available to new industrial units under the Government of India package, 3% subsidy shall be payable on the working capital facilities available from the commercial banks to all existing units for the remaining period of their eligibility and to the units not getting interest subsidy under the central package. 100% subsidy on purchase/installation of D.G Sets from 10 KWs to 1000 KWs capacity with a maximum limit of Rs 25 Lakhs. Investment Climate - A Report on Northern States of India 72

77 5 Testing Equipment 100% Capital subsidy on purchase/installation of testing equipment. Maximum limit Rs lakhs. Such refund shall be disbursed only if the unit obtains a national/international quality mark 6 Project Report 100% Subsidy for preparation of feasibility Report subject to maximum of Rs 2.00 lakhs. 7 Toll Tax negative lists. No toll tax on empty containers brought into the state Exemption on toll tax to be continued upto , subject to the for stuffing of industrial products for export out of the state 8 GST Exemption GST exemption to be continued till VAT is imposed or ti ll for existing and new units, whichever is earlier, subject to the negative lists. The exemption of GST on the raw material procured by the local industrial units shall be available only to SSI units, subject to negative list 9 CST Exemption CST exemption to SSI units to be continued upto Extended to medium & large industrial units, subject to a negative list 10 Price preference Upto 15% price preference to be given to SSI units on landed cost 11 Air Freight Subsidy 12 Research and Development Human Resource Development 5% interest subsidy on term loan available for Technocrats (Engineering Graduate/ M.B.A s) 15 Stamp Duty 16 Capital Investment Subsidy for modernisation 17 Brand Promotion % subsidy on pollution control equipment Exemption of court fees 20 Transport Subsidy Air freight subsidy shall be continued upto at the rate of 50% subject to the ceiling of Rs 5.00 lakhs per year per unit. Also made applicable to incoming raw material 50% subsidy on the expenditure incurred on R&D subject to ceiling of Rs 5.00 lakhs 50% cost of training to be borne by the Govt. subject to ceiling of Rs 5000/- per trainee, and Rs 1 lakh per annum for a unit 5% interest subsidy on term loan available for Technocrats, Postgraduates shall also be now eligible for the subsidy Mortgage deed in favour of financial institutions to be signed by the promoters shall be exempted from payment of stamp duty upto CIS of the state government shall be available to SSI units, undergoing modernisation subject to the limits as prescribed under CIS scheme of the state government. 50% of expenses incurred in the 1 st year subject to a limit of Rs lakhs, 30% of expenses incurred in the 2nd year subject to a limit of Rs lakhs and 10% of expenses incurred in the 3rd year subject to a limit of Rs lakhs, shall be available Under the new policy, it is proposed that 30% subsidy be extended for purchase of pollution control equipment subject to ceiling of Rs lakhs per unit Registered industrial units shall be exempted from payment of court fee for registration of documents relating to lease of land This is a Govt. of India scheme and continued as such. The scheme stands extended upto Earnest Money/Security Deposit Note: A CLASS denotes Zainakote, Barzulla, and Baghe- Ali- Mardhan Khan B CLASS denotes Rangreth, Khunmoh, Zakura and Kathua C CLASS denotes All other Estates which are not included in A & B Class above 1 Kanal = 4,500 sq ft Source: Government of Jammu & Kashmir SSI units required to pay only 50% of earnest money or Rs 5000/-, whichever is lower. Tender documents to SSI 50% of the price of document or Rs 100/-, whichever is lower 73 Investment Climate - A Report on Northern States of India

78 Apart from the industrial policy, the state also has sectoral policies for e.g. IT policy, 2004 which was formulated to increase the use of IT in all sectors like industry, education, infrastructure and make it a sunrise industry. Besides, the state has a Development of Micro/Mini Hydro Power Policy, Key incentives of the policy are as under No entry tax will be levied by the state government on power generation/transmission equipment and building material used for micro/mini hydro power projects. The government land if required, for power projects shall be allotted on lease for 40 premium of Rs 1 per sq. m. Mortgage deed shall be exempted from payment of stamp duty. 3% interest subsidy on the working capital facilities to IPPs for a period of 5 years initially from the date of allotment and to be reviewed after 5 years. 10% subsidy on capital investment subject to the ceiling of Rs lakhs, in addition to the central subsidy for the power projects of 1 2 MW. For the Hydel Projects up to 2MW capacity, 12% shall be charged after 10 years of commissioning of the project. PUNJAB The aim of the new Industrial Policy, 2009 is to promote a balanced growth of the agriculture and industrial sectors, rejuvenate small scale sector and attract more investment in the large scale sector. The policy has separate Agro Industrial Policy, 2009 and IT/ Knowledge Industry Policy, 2009 as its sub policies. Key incentives offered in the policy are as under Agro Industrial Policy Key Incentives Interest subsidy to agro industrial units 5% back ended subsidy for 5 years on the interest on term loan subject to a ceiling of Rs 20 lakhs per year per unit will be provided. Interest subsidy will be available to agro industrial units making fixed capital investment ranging from Rs 10 crores to less than Rs 25 crores and availing term loan upto Rs 15 crores. The cost of land for the computation of fixed capital investment will not be more than 20% of fixed capital investment. Interest subsidy to small/medium agro industrial units for modernisation and technology upgradation 5% back ended subsidy for 5 years on the interest on term loan subject to a ceiling of Rs.20 lacs per year per unit will be provided. Interest subsidy will be available to existing small/medium agro industrial units undertaking modernisation and/or technology upgradation for installing new equipments and availing term loan upto Rs 5 crores for the purpose. Assistance for setting up centre of excellence for development of technologies in the area of agro / food processing industry The state government intends to set up centres of excellence on PPP model to develop appropriate food processing/processing technologies (suitable to Punjab crops). The centres would be provided financial assistance upto 25% of the fixed capital investment, subject to a ceiling of Rs 2.50 crores. Investment Climate - A Report on Northern States of India 74

79 Assistance for International Food Standards/ Global Gap Certification In order to improve food quality & food safety at all levels of operations from farm to fork, assistance for obtaining International Food Standards/Global Gap Certification will be provided to the extent of 50% of actual expenditure subject to a ceiling of Rs 1 lakh to producers of fruits & vegetables. Assistance for Preparation of Detailed Project Reports To enable implementation of agro industrial units in a scientific manner, government will provide financial assistance to the extent of 50% of the cost of preparation of Detailed Project Report subject to a ceiling of Rs 5 lakhs. Assistance for Patent Registration For patent registration of new products relating to agro industries & agriculture, assistance of 50% will be provided, subject to a ceiling of Rs 2 lakh per patent. The financial assistance will be made after the patent has been registered. IT/ Knowledge Industry Policy Key Incentives Incentives in respect of electric power Power to IT units/knowledge industrial units at industrial tariff irrespective of their location/zoning The captive power generation facility installed by IT units will be eligible for 100% exemption from payment of electricity duty. IT units/knowledge industrial units would be entitled for 100% exemption from electricity duty for 5 years. IT parks notified by Punjab Information and Communication Technology Corporation Limited (PICTCL) will have provision for uninterrupted power supply. Special Incentives for Mega Projects Government may consider special package of incentives for all Mega Projects on a case to case basis. Empowered Committee under the Chief Minister shall approve the special package of incentives and modalities for the same. Special Incentives for Small and Medium Enterprise (SMEs) Capital of fixed capital investment in a project, subject to Ceiling of Rs 20 lakhs, to be available to first 10 approved SME units in the IT Parks notified by PICTCL SEZ Act 2009: Key Incentives Exemption from payment of any tax duty, fee, cess or any other levy. Exemption from stamp duty, registration fee and social security cess on purchase of land for SEZ and on first transfer or lease of immovable property within SEZ in Punjab Act. Permission for generation of electricity in or outside SEZ for consumption of units in SEZ. No electricity duty on generation, transmission and distribution and consumption of electricity within SEZ. All SEZ units will be given a public utility status. RAJASTHAN The new Industrial and Investment policy, 2010 aims at enhancing enterprise and sector competitiveness while 75 Investment Climate - A Report on Northern States of India

80 stimulating a substantial increase in the flow of investment. The main objective of the policy is to achieve higher and sustainable economic growth through greater private investment in manufacturing as well as service sectors while encouraging rapid growth of sectors in which Rajasthan has natural or strategic advantage. The subsidies and exemptions granted in the Rajasthan Investment Promotion Scheme 2010 are as under. Subsidies Subsidy shall consist of investment subsidy and employment generation subsidy for a period of seven years, to all enterprises to which an entitlement certificate as prescribed under the scheme has been issued. However for MSME located in the notified area the benefit of subsidy shall be for ten years. Type of Subsidy Investment Subsidy Employment Generation Subsidy Amount of Subsidy 30% of tax(es) which have become due and have been deposited by the enterprise. 20% of tax(es) which have become due and have been deposited b y the enterprise, subject to clause E of the Scheme Source: Government of Rajasthan Exemptions S. No. Category of Investment Type of Exemption from Taxes /Duties /Charges Extent of percentage of Exemption Period of Exemption New Enterprise and Project for Common Social Good Investment made for Modernization/ Expansion/ Diversification Sick Industrial Enterprise for its revival Luxury Tax 100% Seven years from the date of Electricity Duty 50% issuance of Entitlement Certificate. However for MSME Entertainment Tax 50% located in the notified area Land Tax 50% the period of exemption shall be for Mandi Fee 50% ten years. Stamp Duty on purchase or lease of land and construction/improvement on such land Conversion Charge payable for change of land use 50% 50% One time for each such transaction for the same project. Luxury Tax 100% Seven years from the date of Electricity Duty 50% issuance of Entitlement Certificate. However for MSME Entertainment Tax 50% located in the notified area Land Tax 50% the period of exemption shall be for Mandi Fee 50% ten years. Stamp Duty on purchase or lease of land and construction/improvement on such land Conversion Charge payable for change of land use 50% 50% One time for each such transaction for the same project. Luxury Tax 100% Seven years from the date of Electricity Duty 50% issuance of Entitlement Entertainment Tax 50% Certificate. However for MSME located in the notified area Land Tax 50% the period of exemption shall be for Mandi Fee 50% ten years. Stamp Duty on purchase or lease of land and construction/improvement on such land Conversion Charge 50% 50% One time for each such transaction for the same project. Source: Government of Rajasthan Investment Climate - A Report on Northern States of India 76

81 To make the state s MSMEs globally competitive the state government formulated the Rajasthan Micro, Small, Medium Enterprises Development Assistance Scheme, All MSMEs of the state having acknowledgment of entrepreneurs memorandum-i and II are eligible for the benefit under this scheme, subject to fulfillment of certain conditions. Key Incentives under this scheme RIICO to provide land at 50% of the prevailing District Level Committee (DLC) rates. State Government to provide 50% of the capital cost for establishment of Common Effluent-treatment Plants (CETP). Reimbursement of expenses incurred towards filing, sharing patent, ISO certification. Establishment of national laboratories by providing land at 50% of DLC rates and part of capital cost. RIICO to develop separate areas for MSME with 24-hour uninterrupted power supply and enabling infrastructure. Encourage private sector to set up industrial parks by providing a level playing field vis-à-vis RIICO. Exemption from entry tax for inputs (raw material, processing and packaging material, except fuel). Exemption of 75% from electricity duty to the units located in rural areas. Incentives for Mining and Mineral based Industries Rajasthan is a mineral rich state having 79 varieties of minerals, of which 58 are being commercially exploited. Rajasthan Mineral Policy 2011 offers various incentives to take advantage of the rich mineral resources of the state. Key incentives of the policy are as under To provide preference for allotment of mining leases to entrepreneurs who have set up or willing to set up value addition industries in the state. Mining leases shall be mortgaged in favour of financial institutions for procurement of term loans. UTTAR PRADESH The Industrial and Service Sector Investment Policy, 2004 aims at achieving all round development of the state and to accelerate the pace of growth of industry, commerce, trade and services. The state offers a wide range of financial subsidies, grants and rebates for businesses under this policy. Rationalisation of Stamp Duty & Trade-Tax Rates State government provides 100% exemption from stamp duty on the purchase or lease of land for the following projects i) Small scale and tiny industrial units in 29 districts of Poorvanchal and 7 districts of Bundelkhand. ii) Development of infrastructure facilities. iii) Information Technology (IT), Bio-Technology (BT), business process outsourcing, call centres and food processing units. All other industrial projects will be entitled for a 50% exemption from stamp duty on purchase or lease of land. 77 Investment Climate - A Report on Northern States of India

82 Medium and large scale industries will be exempted from payment of entry tax on as follows i) in 29 districts of Poorvanchal and 7 districts of Uttarakhand for 15 years. ii) in other districts for 10 years. The rate of interest on the arrears of trade tax will be 14% on declared tax and 12% on the assessed tax. Power bill subsidy equal to trade tax paid by the unit on purchase of raw materials will be given for 10 years to all new units in the state. Industries and traders with turnover of less than Rs 3 lakhs shall be exempted from the compulsory registration with the trade tax department. Special incentives on establishment of pioneer units The first industrial units established in every district and having an investment of i) Rs 10 Cores for information technology, bio-technology of food-processing units. ii) Rs 25 Crores for any other unit. shall be declared pioneer units. Such units will be given interest free loan for a period of 15 years. Subsidy to private sector Following subsidy will be given from the Industrial Infrastructure Development Fund (IIDF) for development of infrastructure in private sectors i) 50% of the capital-investment subject to a maximum of Rs 2.5 crore for establishment of industrial area related with IT & BT. ii) 20% of the capital investment subject to a maximum of Rs 2.5 crores for establishment of other industrial areas. iii) 50% of the capital investment subject to a maximum of Rs 50 lakh for establishment of call centre zones. Like infrastructure facilities, the enterprises in hospitals, medical and dental colleges, educational institutions, call centers, multiplexes, cinema halls, shopping malls, entertainment centers etc. shall get 100% exemption in stamp duty on purchase of immovable property or taking property on lease and registration Rs 2/- per thousand (maximum limit Rs 5,000/-). UTTARAKHAND Uttarakhand has emerged as one of the major industrial destinations in India. To encourage private participation in all the industries and to promote growth of all the sectors the state government has undertaken various policy initiatives from time to time. The aim of the Industrial Policy, 2003 is to provide a comprehensive, investor friendly environment for ensuring rapid and sustainable industrial development in Uttarakhand. Industrial Policy 2003: Key Incentives 100% income tax exemption for first 5 years and 30% for next 5 years for the companies and 25% for others. Capital investment with a maximum of Rs 30 Lakh Exemption from entry tax on plant & machinery Stamp duty concessions in specialised commodity parks Investment Climate - A Report on Northern States of India 78

83 Interest 3% with a maximum of Rs 2 lakhs per annum per unit For SSI units and units notified as thrust industries being set up in remote areas, the interest incentive shall be 5% with a maximum of Rs 3 lakhs/annum. For modernisation of new existing industrial units, additional investment to the extent of 25% of the undepreciated book value of plant and machinery, 100% exemption on entertainment tax for multiplex projects for a period of three years, and for all new amusement parks and ropeways for five years. 75% of the total expenditure subject to a maximum of Rs 2 lakhs incurred in obtaining national/international quality certification to be reimbursed 50% of the expenses subject to a maximum of Rs 1 lakh incurred in installing pollution control equipments to be reimbursed 75% of the cost subject to a maximum of Rs 2 lakhs for registering patents shall be reimbursed For integrated industrial development of the hilly and remote areas of Uttarakhand, state government introduced Hill Policy in April The scheme is valid up to 31 March Hill Policy 2008: Key Incentives Fiscal & concessional incentives under the Special Integrated Promotion Scheme Policy 2008 for hilly and remote areas Land resource development promotion scheme Exemption from payment of stamp duty Grant to the maximum of Rs 50 lakhs or 50% to the founding members or sponsors on the expenditure incurred on areas or setting up mega projects in the estate including the basic infrastructure requirements Special State Capital Investment Production Incentive Capital incentive at the rate of 25% of the total investment subject to a maximum of Rs 3 lakhs to the industries making investment in the districts specified in Category-A 5 Capital incentive at the rate of 20% of the total investment subject to a maximum of Rs 25 lakhs to the industries making investment in the districts specified in Category-B 6 Special Component of Interest Incentive Interest incentive to SSI at the rate of 5% subject to the maximum of Rs 3 lakh per unit. Incentive of simple interest upto 6% of the total loan sanctioned subject to a ceiling of Rs 5 lakhs and 5% subject to a ceiling of Rs 3 lakh per unit per annum to the industries in Category A and B respectively. Power concessions to new industrial units u u 100% rebate or exemption on electric bills for a period of ten years Preferences and priorities to industries based on the fruit preservation, herbal and medicinal plants and domestic produce. 5 Category- A includes the remote hill and border districts of the State including the newly created districts comprising of the hill territories of the district Uttarkashi, Pithoragarh, Chamoli, Champavat, Rudraprayag 6 Category- B includes the territories of district Pauri Garhwal, Tehri, Almora and Bageshwar including the Development Blocks forming the hill areas in district Dehradun and Nainital except the territories comprising the Doiwalla, Sahaspur and Raipur Blocks in district Dehradun and the territories comprising the Haldwani and RamNagar Blocks in district Nainital. 79 Investment Climate - A Report on Northern States of India

84 Incentives for Tourism Sector Key incentives offered in the Tourism policy 2001 are as under: New tourism units will be allowed rebate and or deferment facility in respect of luxury tax for a period of five years New ropeways will be exempt from payment of entertainment tax for a period of five years New amusement parks will be exempt from entertainment tax for a period of five years The state also has sector specific policies to promote growth of all the sectors. The state government formulated an IT Policy, 2006 to expand the IT sector in the state. Besides the state has a Biotechnology Policy, 2004 to deploy, use, exploit and leverage the biotechnology as an effective tool for catalyzing accelerated economic growth by sustainably harnessing and converting the State s bio-wealth into economic wealth. Observations and Conclusions The state governments have been vying with each other in terms of attracting investments. In addition to focusing on infrastructure creation, the policies have also been extending subsidies and incentives specially to industry in backward areas, mega projects, focus industries which the governments are encouraging and MSMEs. Investment Climate - A Report on Northern States of India 80

85 Chapter 8 PHYSICAL INFRASTRUCTURE The status of physical infrastructure in a country/state/region is one of the most crucial components which influences investment considerations. Giving the desired boost to infrastructure projects at the national, state and sub state levels is the priority of the policy makers. Coordination of policy decisions of the centre, states and local bodies is essential. With government funding becoming increasingly scarce and inadequate, the recent focus is on commercialising this hitherto heavily subsidized Government dominated sector through privatisation or Public- Private Partnerships (PPP). This chapter attempts to look at the present status of infrastructure in Northern states. Under the purview of physical infrastructure, we include the state of power supply, roads, and airports. POWER Access to reliable power at reasonable cost is a primary requirement of industry. The constitution of India has placed power in the concurrent list implying that the responsibility of taking and implementing decisions has to be shared by both the central and state governments. This has brought in a regime where the development of the power sector in the state has to be within the national policy and the primary responsibility at the consumer end is to be borne by the states. CHANDIGARH Chandigarh has an installed capacity of 99 MW as on 31 December There is no peak deficit experienced by the UT. Power Supply Position Period Peak Demand (MW) Peak Met (MW) Peak Deficit / Surplus (MW) Peak Deficit/ Surplus (%) Source: Central Electricity Authority DELHI The installed capacity of Delhi is 5,094 MW as on 31 December The peak deficit has been increasing and stood at 2.1% in Power Supply Position Period Peak Demand (MW) Peak Met (MW) Peak Deficit/ Surplus (MW) Peak Deficit/ Surplus (%) ,417 3, ,389 3, ,558 3, ,722 3, ,000 3, ,075 4, ,036 4, ,502 4, Source: Central Electricity Authority 81 Investment Climate - A Report on Northern States of India

86 Upcoming Projects Project Agency Sector Status Capacity Likely Year/ Date of Commissioning Pragati III PPCL State Under Construction 1,250 MW Rithala CCPP NDPL Private Commissioned 108 MW - Source: Central Electricity Authority Power Sector Reforms In January 2001, Government of Delhi approved the unbundling of Delhi Vidyut Board (DVB) into six successor entities; one holding company, one generation company (GENCO), one transmission company (TRANSCO) and three distribution companies (DISCOMs). On July 1, 2002, the Government of Delhi privatised the distribution portion of DVB, a vertically integrated state owned power enterprise, through the sale of 51% of the equity in three distribution companies. The three distribution companies created at the time of privatisation were sold to two privately-owned Indian power companies, BSES and Tata Power. BSES bought two companies covering the central and east zones and the south and west zones and Tata Power purchased one company covering the north and north west zones. HARYANA The installed capacity in the state is 5,927 MW as on 31 December The peak demand deficit has increased from 2.5% in to 7.4% in Power Supply Position Period Peak Demand (MW) Peak Met (MW) ,411 3, ,465 3, ,037 3, ,333 3, ,837 4, ,956 4, ,511 4, ,133 5,678 Source: Central Electricity Authority Peak Deficit/ Surplus (MW) Peak Deficit/ Surplus (%) To cope with the growing demand, Haryana has added 1,138 MW of generation capacity in last three years. Project Agency Sector Status Capacity Indira Gandhi TPS (Jhajjar) Indira Gandhi TPS Unit 1 (Jhajjar) Yamuna Nagar Unit 1 & 2 Rajiv Gandhi Unit 1 (Hissar) Rajiv Gandhi Unit 2 (Hissar) NTPC Source: Central Electricity Authority Projects Planned for XIth Plan ( ) Central Under Construction Likely Year/Date of Commissioning 1,000 MW NTPC Central Commissioned 500 MW - HPGCL State Commissioned 600 MW - HPGCL State Commissioned 600 MW - HPGCL State Commissioned 600 MW - Investment Climate - A Report on Northern States of India 82

87 Power Sector Reforms The State's Electricity Reforms Act, 1997 provided for the constitution of a Regulatory Commission, restructuring of the electricity sector, rationalisation of the generation, transmission, distribution and supply of electricity, and the creation of avenues for participation of private sector entrepreneurs in the electricity industry. Haryana Electricity Regulatory Commission was established on August 17, The state government unbundled the Haryana State Electricity Board (HSEB) in August 1998 into separate functional entities, viz. Haryana Power Generation Corporation Limited (HPGCL) for generation of power and Haryana Vidyut Prasaran Nigam Limited (HVPNL) for conduct of power and Haryana Vidyut Prasaran Nigam Limited (HVPNL) for conduct of transmission and supply of electricity business in the state. The state government implemented a second transfer scheme on 1 July 1999 to transfer distribution system assets & liabilities from HVPNL to two distribution subsidiaries, Uttar Haryana Bijli Vitaran Nigam Limited (UHBVNL) and Dakshin Haryana Bijli Vitaran Nigam Limited (DHBVNL). HIMACHAL PRADESH The total installed capacity in the state is 2,284 MW as on 31 December Out of that 1,732 MW is hydel capacity. Source: Central Electricity Authority Himachal Pradesh is the only state in the region with a peak demand surplus. Also, it is net exporter of power. HP remains the biggest source of power to the power deficient states in the region. The following projects are being set up in the state Projects Planned for XIth Plan Project Agency Sector Status Capacity Likely Year/ Date of Commissioning Parbati III NHPC Central Under Construction 520 MW Chamera III NHPC Central Under Construction 231 MW Koldam NHPC Central Under Construction 800 MW Budhil LANCO IPP State Under Construction 70 MW Allain RSWML State Commissioned 192 MW - Duhangan Malana II EVREST PC State Under Construction 100 MW Karcham JPKHCL State Under Construction 1000 MW Wangtoo Sorang SORAND PC Source: Central Electricity Authority Power Supply Position Period Peak Demand Peak Deficit/ Peak Deficit/ Peak Met (MW) (MW) Surplus (MW) Surplus (%) ,061 1, ,055 1, ,118 1, State Under Construction 100 MW Investment Climate - A Report on Northern States of India

88 JAMMU & KASHMIR The installed capacity in the state was 2,287 MW, with 1,504 MW in hydel plants and 577 MW in thermal plants in The power deficit in the state runs high. Power Supply Position Period Peak Demand (MW) Peak Met (MW) Peak Deficit/ Peak Deficit/ Surplus (MW) Surplus (%) ,250 1, ,268 1, ,316 1, ,450 1, ,530 1, ,950 1, ,120 1, ,247 1, Source: Central Electricity Authority Projects being set up in the state include Projects Planned for XIth Plan Project Agency Sector Status Capacity Likely Year/ Date of Commissioning Sewa - II Unit 1 NHPC Central Commissioned 40 MW - Sewa- II NHPC Central Commissioned 80 MW - URI- II NHPC Central Under Construction 240 MW Nimoo Bazgo NHPC Central Under Construction 45 MW Chutak NHPC Central Under Construction 44 MW Baglihar Unit-1, 2 & 3 JKPDC State Commissioned 450 MW - Source: Central Electricity Authority PUNJAB Punjab has been reeling under severe power shortages. The peak deficit in the state is as high as 25 %. The installed capacity in the state is 6,974 MW as on 31 December, Source: Central Electricity Authority Power Supply Position Period Peak Demand Peak Deficit/ Peak Deficit/ Peak Met (MW) (MW) Surplus (MW) Surplus (%) ,849 5, ,922 5, ,122 5,559-1, ,731 6,158-1, ,971 6,558-2, ,672 7,340-1, ,690 7,309-1, ,786 7,407-2, Investment Climate - A Report on Northern States of India 84

89 Source: Government of Punjab Projects under Implementation Projects under implementation Capacity Proposed Invst. (Rs Crore) Agency Talwandi Sabho, Mansa(Thermal) Work 2,600 started MW 10,000 Sterlite Energy Rajpura, Patiala(Thermal) - Allotted 1,320 MW 6,600 L&T Goindwal Sahib, Tarn Taran (Thermal) Work started 540 MW 2,964 GVK Shahpurkandi(Hydel) 168 MW 2,286 PSEB UBDC Stage III ( Hydel) 85 MW 1088 Bhilwara Energy Mukerian Stage II (Hydel) 18 MW 120 PSEB TOTAL ,058 - Ultra Mega Power Projects 2,300 MW Central Sector Projects 2,200 MW - - Power Sector Reforms In April 2010, restructuring of the Punjab State Electricity Board (PSEB) was approved. The restructuring of the PSEB has resulted in creation of two separate companies - the Punjab State Power Corporation Ltd (Powercom) for managing generation and distribution, and the Punjab State Transmission Corporation Ltd (Transco) for transmission. RAJASTHAN The total installed capacity in the state is 8,528 MW as on 31 December The demand-supply balance in the state remains comfortable with zero peak deficit level. Power Supply Position Period Peak Demand Peak Deficit/ Peak Deficit/ Peak Met (MW) (MW) Surplus (MW) Surplus (%) ,880 3, ,134 4, ,786 4, ,588 4, ,794 4, ,374 5, ,303 6, ,859 6, Source: Central Electricity Authority 85 Investment Climate - A Report on Northern States of India

90 Projects Planned for XIth Plan Project Agency Sector Status Capacity Barsingsar LIG NLC Central Commissioned 250 MW Rapp Unit 5 & 6 NPC Central Commissioned 440 MW Chabra TPS 1 RRVUNL State Commissioned 250 MW Chabra TPS 2 RRVUNL State Commissioned 250 MW Kota RRVUNL State Commissioned 195 MW Suratgarh Ext RRVUNL State Commissioned 250 MW Dholpur RRVUNL State Commissioned 330 MW Giral RRVUNL State Commissioned 125 MW Jalipa Lignite Unit 1 IPP Private Commissioned 270 MW Jalipa Lignite Unit 2 IPP Private Commissioned 810 MW Source: Central Electricity Authority Power Sector Reforms Rajasthan Government initiated the reform process in Rajasthan State Electricity Board has been bifurcated into separate generation, transmission, and three distribution companies. Rajasthan State Electricity Board was unbundled into five companies. Rajasthan Rajya Vidyut Utpadan Nigam owns and controls the thermal-gas-based and hydel power-generating stations. The Rajasthan Rajya Vidyut Prasaran Nigam owns and controls 66 KV to 400 KV sub-stations and associated transmission lines. Three distribution companies, each called located at Jaipur, Ajmer and Jodhpur, had been assigned eight RSEB circles each and the RSEB assets, liabilities and employees had been distributed among them. Multi buyer model has been introduced w.e.f by transferring bulk supply function from RVPN to three Discoms. Rajasthan was the first State to be fully compliant with the provisions of the Electricity Act, The Rajasthan Electricity Regulatory Commission was established in Jan 2000 and is vested with all functions under the Reforms Act, licensing for transmission and distribution, regulation of the activities of the utilities and determination of bulk and retail tariff etc. Rajasthan is the first state in the country to have followed the international competitive bidding route for the selection of private sector companies for the projects. The state government has also initiated steps for the privatisation of the transmission and distribution system in the state. Investment Climate - A Report on Northern States of India 86

91 UTTAR PRADESH The total installed capacity in the state is 10,384 MW as on 31 December 2010.The peak demand deficit is 21.1%. Source: Central Electricity Authority Projects Planned for XIth Plan Project Agency Sector Status Capacity Likely Year/ Date of Commissioning Rihana III NTPC Central Under Construction 500 MW Dadri Ext NTPC Central Commissioned 980 MW Parichha Ext UPRVUNL State Under Construction 500 MW Harduaganj Under UPRVUNL State Ext Construction 500 MW Anpara D UPRVUNL State Under Construction 500 MW Anpara C LANCO Private Under Construction 1200 Mw Rosa Ph-1 ROSA POWER Private Commissioned 600 MW - Rosa Ph-2 ROSA Under Private POWER Construction 600 MW Source: Central Electricity Authority Power Supply Position Period Peak Demand Peak Deficit/ Peak Deficit/ Peak Met (MW) (MW) Surplus (MW) Surplus (%) ,700 5, ,218 6,029-1, ,877 6,268-1, ,175 6,588-1, ,184 7,531-1, ,104 8,568-2, ,587 8,248-2, ,856 8,563-2, Despite its maximum share in power sector demand, the per capita power consumption remains the lowest within the region due to supply side constraints. No significant generation capacity has been added in last two decades. Power Sector Reforms The Government of Uttar Pradesh announced its power sector reform policy statement in Steps taken UPERC established in UP started functioning under regulated regime since June UPSEB unbundled in January 2000 into three corporations i.e. UPPCL, UPRVUNL & UPJVNL. Different corporations started functioning commercially. Formation of Special Electricity Courts in all districts and state level court also done. First sitting of all courts on October 22, In 2010, Uttar Pradesh Power Corporation Ltd handed over the Agra city circle and Kanpur to the Torrent Group under the private franchisee model. 87 Investment Climate - A Report on Northern States of India

92 UTTARAKHAND The total installed capacity in the state is 2,410 MW as on 31 December Uttarakhand has a peak demand deficit of 6 %. Power Supply Position Period Peak Demand Peak Deficit/ Peak Deficit/ Peak Met (MW) (MW) Surplus (MW) Surplus (%) , ,200 1, ,267 1, ,397 1, Source: Central Electricity Authority Projects Planned for XIth Plan Project Agency Sector Status Capacity Likely Year/ Date of Commissioning Koteshwar THDC Central Under Construction 400 MW Maneri Bhali UJVNL State Commissioned 304 MW - Srinagar GVK Private Under Construction 330 MW Source: Central Electricity Authority State wise Estimated Average Rates of Electricity for Industry as on (Rates in paise/kwh) Heavy Heavy Large Industry Small Medium Industry Industry (33 1,000KW State / SEB / Industry 10 Industry 50 1,00,000 KW KV) 20,000 60%L.F. Utility KW (1,500 KW (7, %L.F. KW 60 %L.F. (4,38,000 KWh/Month) KWh/Month) (43,80,000 (87,60,000 KWh/Month) KWh/Month) KWh/Month) Chandigarh Delhi BYPL/BRPL/NDPL Delhi NDMC Haryana HP J & K Punjab Rajasthan UP- Urban UP- Rural Uttarakhand Source: Infrastructure Statistics 2010 Investment Climate - A Report on Northern States of India 88

93 Power Sector Reforms at a Glance For the past decade or so, efforts have been made to reform the Indian power sector with an important option under consideration being 'privatisation' of the distribution process. The reform status in Northern states has been captured in the table below State MoU MoA Tripartite SEB SERC Distribution agreements unbundling constitution Privatization Delhi Yes Yes Yes Yes Yes Yes Haryana Yes Yes Yes Yes Yes - Himachal Yes Yes Yes Yes Yes - Pradesh Jammu & Yes Yes Yes Yes Yes - Kashmir Punjab Yes Yes Yes Yes Yes - Rajasthan Yes Yes Yes Yes Yes - Uttar Pradesh Yes Yes Yes Yes Yes Agra and Kanpur franchised Notes: MoU Memorandum of Understanding signed with Government of India MoA Memorandum of Agreement between the State government with the Ministry of Power, Government of India for charting out the actions to be taken towards power sector reforms in a structured and time bound manner Tripartite Agreements Agreement between the State government, Central Government & the RBI SEB State Electricity Boards SERC State Electricity Regulatory Commission Source: Scoreboard of Reforms, India Infrastructure, 2010 Sale of electricity to industry by utilities during (in GWH) State / UT Electricity sold to Industry Total electricity sold % of electricity sold to industry Haryana 4,990 18, HP 3,100 5, J & K 950 4, Punjab 10,558 29, Rajasthan 7,407 23, UP 8,591 37, Uttarakhand 2,270 4, Chandidarh 280 1, Delhi 2,832 16, Source: Infrastructure Statistics, 2010 Electricity is the key input for industries. The proportion of electricity sold to the industrial sector is highest in Himachal Pradesh followed by Uttarakhand. Infrastructure augmentation planned in T&D under XI Plan With the mounting T&D losses and bottlenecks in the network, both central and state governments have been focusing on schemes related to network augmentation and strengthening. The underlying objective of all such schemes is to bring down AT&C losses to 15% in a time bound manner. While there are central funding schemes as R-APDRP for the distribution sector, with Rs 50,000 Crore earmarked against IT enablement and urban area distribution network strengthening. A snapshot of progress under part A (IT) of R-APDRP project is as on the next page. 89 Investment Climate - A Report on Northern States of India

94 Name of the State No. of Town Sanctioned Sanctioned Loan (Rs crore) Funds Released (Rs crore) Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand Note: R-APDRP: Re-structured Accelerated Power Development and Reform Programme, with focus on actual, demonstrable performance in terms on substantial loss reduction, including the projects for establishment of baseline data and IT applications for energy accounting/auditing & IT based consumer service centres and regular distribution strengthening projects. Source: Ministry of Power, Government of India Uttar Pradesh has the highest number of towns sanctioned under part A (IT) of R-APDRP with maximum amount of funds released, followed by Rajasthan and Punjab. While, the state of Himachal Pradesh has minimum amount of funds released. Transmission Line Project - XI Plan Capacity Addition Programme (in Circuit Kilometers) Central/State Sector Target Achieved Haryana 400 kv Haryana 220 kv Himachal Pradesh 220kV Jammu & Kashmir 220 kv Rajasthan 400 kv Rajasthan 220 kv Punjab 220 kv Uttar Pradesh 400 kv Uttar Pradesh 220 kv Uttarakhand 400 kv Uttarakhand 220 kv Source: Central Energy Authority (CEA) ROADS Growth of a region depends inter alia, on how well it is connected internally as well as with the rest of the world. Roads not only enable masses to use the public road transport at economical prices but also helps in smoothening inter regional disparities in availability of goods. Investors take into account the rail-road connectivity factors while assessing the investment potential of a region. CHANDIGARH The total road length in Chandigarh is 2,118 km wherein national highway contribute 24 km till DELHI Delhi has a total road length of over 29,559 km. It has about 72 km of NH. The existing road network is being upgraded and express highways and freeways being constructed along key routes in Delhi and the NCR. The Golden Quadrilateral project of the National Highways Authority of India (NHAI) directly connects Delhi to other major cities of the country. Investment Climate - A Report on Northern States of India 90

95 HARYANA Haryana has a good road network with total length of roads 29,726 km comprising of the national highways covering 1,512 km and state highways covering 2,523 km in Public Private Partnership Projects Name of project PPP Type Project Cost (Rs Crore) Stage Panipat-Jalandhar BOT-Toll 2,288 Construction Kundli - Manesar - Palwal expressway BOT-Toll 1,915 Construction Zirakpur-Parwanoo BOT-Toll 475 Construction Kundli-Ghaziabad-Palwal Expressway BOT-Toll 2,700 Bidding Stage Source: pppindiadatabase.com & Newspapers HIMACHAL PRADESH Roads have been assigned a high priority by the Government of Himachal Pradesh. Of the total road length of 36,298 km, NH accounts for 1,208 km whereas state highways account for 1,824 km in 2008 Public Private Partnership Projects Name of project PPP Type Stage Zirakpur- Parwanoo Road BOT-Toll Construction Source: pppindiadatabase.com JAMMU & KASHMIR The total road length in the state is about 22,323 km, out of which, national highways (1,245 km), state highways (688 km) in 2008 Name of project Four laning of Jammu- Udhampur section Four laning of Quazigund Banihal section Four laning of Chenani to Nashri section Source: pppindiadatabase.com Public Private Partnership Projects PPP Type Project Cost (Rs Crore) Stage BOT- Annnuity 1,814 Construction BOT- Annnuity BOT- Annnuity 1,987 Construction 2,519 Construction PUNJAB The road network of Punjab spans across 45,178 km in the year Of the total length, NH accounts for 1,557 km and SH accounts for 1,393 km. Over the past decade, the state has made satisfactory progress in improving its 91 Investment Climate - A Report on Northern States of India

96 road network. Most of the road projects have been funded through state allocations. However, of late, there has been good participation of private sector in the road sector of the state. Public Private Partnership Projects Name of project PPP Type Project Cost (Rs Crores) Stage Panipat-Jalandhar BOT-Toll 2,288 Operational Kurali-Kiratpur NH 21 BOT-Toll 309 Operational Ambala-Zirakpur BOT-Toll 298 Operational Zirakpur-Parwanoo BOT-Toll 475 Construction Jalandhar-Amritsar BOT-Toll 263 Construction Amritsar-Wagha Border BOT-Toll 206 Construction Upgradation, operation and maintenance of Ferozpur-Fazilka road. BOT-Toll 124 Construction Source: pppindiadatabase.com RAJASTHAN The road network of Rajasthan covers a length of 1,71,479 km, of which NH accounts 5,585 km and SH accounts for 11,240 km in There has been good performance in PPP projects on account of a strong policy and institutional framework. In fact, the state restructured the erstwhile Rajasthan State Bridge and Construction Corporation Limited in the year 2000 to include construction of privately financed infrastructure projects, mainly highways, bridges and road over bridges on a BOT basis. Public Private Partnership Projects Name of project PPP Type Project Cost (Rs Crore) Stage Gurgaon-Kotputli-Jaipur Road BOT-Toll 1,674 Construction Mahapura (near Jaipur)- Kishangarh road BOT-Toll 644 Construction Palanpur-Swaroopganj road BOT-Annuity 498 Construction Mahua-Jaipur road BOT-Toll 483 Construction Bharatpur- Mahua road BOT-Toll 250 Construction Agra Bharatpur BOT-Toll 195 Construction Source: pppindiadatabase.com UTTAR PRADESH Uttar Pradesh has a road network spanning 1,39,362 km. Of the total length, NH accounts for 5,874 km whereas SH accounts for 1,576 km in The state government has taken definite steps to improve its road network by launching some of the biggest projects in the country on a PPP basis like the Yamuna Expressway and Ganga Expressway. Investment Climate - A Report on Northern States of India 92

97 Name of project Public Private Partnership Projects PPP Type Project Cost (Rs Crore) Stage Gorakhpur bypass project on NH-28 BOT-Annuity 649 Construction Gwalior-Jhansi road project (NH) BOT-Annuity 604 Construction Bara to Orai BOT-Annuity 465 Construction Road stretch (50 km) between Jhansi- 421 BOT-Annuity Lalitpuron NH-25/26 Construction Merrut-Muzzaffarnagar toll project on NH -58 BOT-Toll 359 Construction Lucknow-Sitapur road BOT-Toll 322 Construction Jhansi-Lalitpur BOT-Annuity 313 Construction Agra to Bharatpur on NH-11 BOT-Toll 195 Construction Source: pppindiadatabase.com UTTARAKHAND Uttarakhand total length of road network is 41,041 km. The state has NH of 1,991 km and state highways of 8,391 km in Length of National Highways, State Highways and Rural Roads in NR States National Highways* State Highways** Rural Roads** State (in km) (in km) (in km) Punjab 1,557 1,393 37,093 Chandigarh Delhi Himachal Pradesh 1,409 1,824 34,130 Jammu & Kashmir 1, ,561 Rajasthan 5,585 11,240 1,58,915 Uttar Pradesh 6,774 1,576 2,37,225 Uttarakhand 2,042 8,391 37,839 Haryana 1,518 2,523 24,702 *as on 31st March 2010 **as on 31st March 2008 Source: CSO, Infrastructure Statistics 2010 Density of Roads across States (2008) State Density (per 1,000 sq. km.) Density (per 1,000 population) Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttrakhand Chandigarh Delhi All India Note: Excludes Roads Constructed under JRY and PMGSY Source: CSO, Infrastructure Statistics Investment Climate - A Report on Northern States of India

98 AIRPORTS Out of total of 14 international airports in the country, the region has four international airports (Amritsar, Jaipur, Srinagar, and Delhi). Correspondingly 27 out of a total of 103 domestic airports are located in the Northern region. CHANDIGARH Haryana, Punjab and Chandigarh share airport at Chandigarh, which is now being upgraded to an international airport. The project is jointly being undertaken by the Governments of Punjab and Haryana. DELHI There are two airports in Delhi, Indira Gandhi International Airport and Palam Airport which provides the domestic connectivity. The Indira Gandhi International Airport (IGIL), one of the busiest in the world is located about 16 km from the New Delhi city centre. In July, 2010, the terminal 3 of the airport was inaugurated which will enhance the passenger handling capacity of the airport to 60 million passenger annually. The newly operationalised terminal 3 is spread over 500,000 square meters area and is equipped with 95 immigration counters, 168 check in counters and 78 passenger boarding bridges to handle 34 million passengers per annum (mppa) and 12,800 bags per hour. A cargo village is also being developed to make the airport a focus point of cargo movement. HARYANA There is a domestic airport at Chandigarh and civil aerodromes at Pinjore, Karnal, Hissar, Bhiwani and Narnaul. The Indira Gandhi International Airport at New Delhi is located close to Gurgaon and Faridabad. HIMACHAL PRADESH There are three airports in Himachal Pradesh Kullu (Bhuntar), Kangra (Gaggal) and Shimla (Jubbar Hatti). In addition, there are 57 operational helipads and another 12 helipads being new planned. Night landing facilities are proposed to be given for all the three existing airports JAMMU & KASHMIR The Sheik-ul-Alam airport at Srinagar is a major international airport in Jammu & Kashmir. Jammu and Leh are the other domestic airports. The Srinagar airport recorded passenger traffic of 7,33,089 during and Jammu reported 4,01,954 and 1,98,790 passengers, respectively. PUNJAB The Amritsar airport is the only international airport in Punjab. Amongst the international airports in India, it ranks eleventh in terms of the traffic handled, accounting for a share of only 1.5% of the total traffic at the 14 international airports. To meet the growing demand, the state government has lined up two airport projects in the state Chandigarh International Airport at Mohali and a Greenfield international airport near Ludhiana. Investment Climate - A Report on Northern States of India 94

99 7 The state has a total of four operational airports including civil enclaves Operational Airports Amritsar (Raja Sansi/Guru Ramdas) International Ludhiana (Sahnewal) Domestic Pathankot Civil enclave Chandigarh* Civil enclave Source: Airports Authority of India. * The airport at Chandigarh is planned to be upgraded as International Airport. RAJASTHAN The airport infrastructure in Rajasthan comprises of one international airport at Jaipur, two domestic airports at Kota and Udaipur, and three civil enclaves at Jaisalmer, Jodhpur and Bikaner. Airport Traffic figures Passenger Traffic (nos.) Aircraft Movement (nos.) Freight Traffic (tonnes) Jaipur 1,204,340 1,523,580 17,010 18,458 2,482 6,209 Udaipur 259, ,528 6,100 6, Source: India Infrastructure, September 2009 UTTAR PRADESH Uttar Pradesh has nine airports including civil enclaves. The Lucknow airport is the biggest airport in Uttar Pradesh. But it is relatively very small compared to other domestic airports in some of the other upcoming Tier II cities. In , it handled about 1% of the total domestic traffic in India. Airport Status Operational/non-operational Lucknow Custom Operational Varanasi Custom Operational Kanpur (Civil) Domestic Operational Jhansi Domestic Operational Lalitpur Domestic Non-operational Agra Civil enclave Operational Allahabad Civil enclave Operational Gorakhpur Civil enclave Operational Kanpur (Chakeri) Civil enclave Operational Source: India Infrastructure, September 2009 UTTARAKHAND The state has two domestic airports: one at Jolly Grant in Dehradun district and another at Pantnagar in Udham Singh Nagar district. Presently all flights are connected to Delhi. Up-gradation work is underway at the Jolly Grant airport to facilitate international flights. The state intends to position air-transport as a reliable all-weather transport option for hills. 7 A Civil Enclave is an area allotted at an airport belonging to the armed forces, for the usage of civil aircraft and civil aviation related services 95 Investment Climate - A Report on Northern States of India

100 PPP projects in transport sector Public-Private Partnership (PPP) projects have played an important role in economic growth and development of Indian States. Projects involving central Government, State Governments, multilateral funding bodies and private players have been implemented across States to promote infrastructural development. The NR States have been witnessing a significant growth in number of projects in transport sector infrastructure development. States with estimated costs of PPP projects worth more than Rs 1 billion in the transport infrastructure development includes Delhi, Haryana, Uttar Pradesh and Rajasthan. Among other States of the region, Jammu & Kashmir and Punjab also have significant PPP projects in the transport sector whereas Himachal Pradesh and Uttarakhand lag behind significantly Estimated Cost of PPP Projects in Transport sector ( in Rs Lakhs) Delhi Uttarakhand 1018 Uttar Pradesh Rajasthan Punjab 5357 Jammu & Kashmir 9157 Himachal Pradesh 845 Haryana Rs Lakhs Source: pppinindia.com, Dept of Economic Affairs, Ministry of Finance, Govt. of India Note: PPP projects include projects categorized under: Public Private Partnership Approval Committee (PPPAC) India Infrastructure Project Development Fund (IIPDF) India Infrastructure Finance Company Limited State Projects RAILWAYS Indian Railways is the third largest rail network in the world under a single management. CHANDIGARH Chandigarh has a railway length of 15.7 km in DELHI Delhi is a major junction in the rail network of India and has direct links to all the major cities of India. There are three main railway stations at: New Delhi, Old Delhi and Hazrat Nizamuddin. Despite one of the smallest rail route network, the density of rail length as measured by length of rail line per thousand square km remains one of the highest in the Northern region. The state also has an ICD terminal at Tughlakabad. HARYANA Haryana has a railway-route length of roughly 1,467 km in The important railway stations are Kalka, Kurukshetra, Rohtak, Jind, Hissar, Ambala, Panipat and Jakhal. There is an ICD terminal at Rewari. There is a Investment Climate - A Report on Northern States of India 96

101 proposal to provide a rail-corridor connecting towns around Delhi viz., the satellite towns of Faridabad, Gurgaon, Bahadurgarh and Kundli. There is also a proposal to provide rapid mass transport system between Delhi and the satellite towns. The Rapid Metro Rail Gurgaon is scheduled to be completed by 2013 and will be connecting Sikanderpur to Belvedere Towers. HIMACHAL PRADESH Himachal Pradesh falls under the Northern Railways network. Total length of rail line in Himachal Pradesh stands at 285 km. Two narrow gauge lines connect Kalka with Shimla and Joginder Nagar with Pathankot; route length of 96 and 113 km respectively. A 33 km broad-gauge line connects the Nangal Dam to Charuru. JAMMU & KASHMIR Because of its predominantly mountainous terrain, Jammu & Kashmir is linked with the country's rail network up to the Udhampur district. Work on connecting Srinagar and Baramullah is underway. The Udhampur-Katra (41 km), Katra- Qazigund (130 km) and Qazigund-Baramullah (119 km) rail links have been taken-up for construction as national priority projects. PUNJAB The railways have a major role in the state. It connects major industrial units in the oil refining, cement, fertiliser, thermal power and manufacturing sectors to suppliers and markets. Punjab's railway network spans over 2,133 km in The main inter-state railway routes are Amritsar-Ambala-Delhi, Sriganganagar-Ambala-Delhi, Ferozpur- Ludhiana-Ambala, Pathankot-Roopnagar-Fatehgarh Sahib and Sriganganagar-Bhatinda-Narwana. RAJASTHAN Rajasthan has a total railway network spanning 5,683 km, of which approximately 70% is covered by broad gauge. The railway route length per 1,000 sq. km of geographical area is 16.6 km in Main routes in the state are Jodhpur - Marwar, Jodhpur-Jailsalmer, Lalgarh-Kolayat and Lalgarh-Merta Road station. Jaipur has a completely operational International airport with flights to Dubai, Sharjah, Bangkok, and Singapore. Air cargo complex at Jaipur, inland container depots at Jaipur, Jodhpur, Bhilwara, and Bhiwadi provide conductive environment for trade within and outside India. UTTAR PRADESH The railway network in Uttar Pradesh is the largest in the country. The state is well-connected to other parts of the country by a railway network spanning over 8,553 km in Lucknow is the main junction for the northern and north eastern railways. The major sectors and industries serviced by the railways include agriculture, cement, fertiliser, coal and manufacturing. UTTARAKHAND Uttarakhand has 350 km of rail route till Main focus is on increasing the share of railways in cargo and passenger traffic. Being a hill state the rail density is low. 97 Investment Climate - A Report on Northern States of India

102 Dedicated Freight Corridors boon for Northern region The surging power needs requiring heavy coal movement, booming infrastructure, construction and growing international trade has led to the conception of the Dedicated Freight Corridors (DFCs) along the Eastern and Western Routes. The Eastern Corridor, starting from Ludhiana in Punjab will pass through the States of Haryana and Uttar Pradesh in the NR and extend to Bihar in the East. The total length of the eastern corridor is 1,279 km and 92% of this falls in NR. The Western Corridor will pass through the States of Delhi, Haryana, Rajasthan in the northern region, connecting them to Gujarat and Maharashtra in the West. The total length of the western corridor is 1,483 km and 50% of this falls in NR. Creation of rail infrastructure on such a scale is expected to drive the establishment of industrial corridors and logistic parks along its alignment. After Government approval in February 2008 for undertaking work on the project, substantial amount of preparatory and preliminary work for implementation of the project has been undertaken. Japan International Cooperation Agency (JICA) to fund about 80% of project cost of Western Corridor. World Bank to fund about 67% of the project cost of the Eastern Corridor. These projects are targeted for completion in Potential Projects for Private Participation in Northern Region Name of the Project Length (in Km) Cost as per Survey (Rs Crore) State Ahmedabad-Himmatnagar-Udaipur Gauge Conversion Rajasthan, Gujarat Ambala Cantt - Dhapper Doubling Haryana Bhadoi-Janghai Doubling Uttar Pradesh Bhagat-ki-kothi-Luni Doubling Rajasthan Chhitauni-Tumkuhi Road New Line Bihar, Uttar Pradesh Gauge Conversion of Dholpur-Sirmuttra with extension to Gangapur City Rajasthan Kichha-Khatima New Line Uttarakhand Source: Ministry of Railways Observations & Conclusions Power deficit is an area of concern for all northern region states except Himachal Pradesh. The states in the region need to focus on adding capacity and also on reducing T&D losses. Rail and Road infrastructure is fairly good. Given the fact that the region is landlocked region the proposed freight corridors, large proportions of which lie in the northern region will immensely benefit from these projects. Investment Climate - A Report on Northern States of India 98

103 Chapter 9 NEW INDUSTRIAL INVESTMENTS The report has so far described the present status of the various factors which shape the investment climate of the Northern states/uts. While the states have made good progress in some areas, other areas need prioritised attention in order to improve their overall attractiveness as investment destinations. Given the present status, and in the backdrop of the factors discussed earlier, it would be interesting to look at the investments that have flowed into these states over the past few years. Domestic Investment The domestic private sector investments have been continuously rising in the Northern states amid fluctuation in some years. The tables below show the status of industrial investments in the Northern states/ut during the period to S. No Name of the State/UTs Investment Intentions in Northern States/UTs Prop. Prop. Prop. Inv Nos Inv (Rs Nos Inv (Rs Nos (Rs Cr) Cr) Cr) Nos Prop. Inv (Rs Cr) Nos Chandigarh Prop. Inv (Rs Cr) 2 Delhi Haryana 232 5, , , , ,022 4 Himachal Pradesh 115 1, , , , ,301 5 Jammu & Kashmir 134 2, , , , Punjab 195 7, , , , ,204 7 Rajasthan 186 5, , , , ,123 8 Uttar Pradesh , , , , ,202 9 Uttarakhand 392 5, , , , , NR Total 1,890 59,050 1,612 89, , , , All States/UTs 6,476 3,86,381 5,678 6,96,366 3,804 12,32,457 3,910 11,48,020 3,781 12,67, % Share of NR in all India Note: Investment in terms of Industrial Entrepreneur Memoranda (IEMs) filed, Letters of Intent (LOIs) and Direct Industrial Licences issued Source: DIPP, Ministry of Commerce & Industry, Government of India During FY and , the region witnessed a compound annual growth of 2.1% in terms of amount of proposed investments. The implementation rate of IEMs has grown significantly with the share of northern region, in terms of value of IEMs implemented, in all India increasing from 5.6% in 2005 to 16.6% in However the share of the northern region both in terms of IEMs filed and IEMs implemented is quite poor, 5.1% & 16.6%, respectively. 99 Investment Climate - A Report on Northern States of India

104 Implementation of Industrial Entrepreneur Memoranda (IEMs) Name of the S. No. State/UTs Inv (Rs Inv (Rs Inv (Rs Inv (Rs Inv (Rs Nos Nos Nos Nos Nos Cr) Cr) Cr) Cr) Cr) 1 Chandigarh Delhi Haryana , Himachal Pradesh Jammu & Kashmir Punjab Rajasthan , Uttar Pradesh , , Uttarakhand NR Total 97 2, , , , , All States/UTs , , , , , % Share of NR in all India Source: DIPP, Ministry of Commerce & Industry, Government of India Note: Data pertains to 'Calendar year' in comparison to Investment intention data which is available on 'Financial year' basis In , states that had the maximum share in investment proposals within the Northern region include Rajasthan, Uttarakhand, Uttar Pradesh and Punjab with shares of 29.8%, 19.1%, 17.4% and 15.9% respectively. Together these four states accounted for 82.2% of the proposed investments in the Northern region. Uttarakhand improved its share in implementation of proposed investment in Northern region from 4.1% in 2005 to 22.2% in This led to a commensurate rise in its share of new investment proposals within the region from 9.7% in FY to 19.1% in FY Foreign Direct Investments The Northern region constitutes 20.7% of India's cumulative FDI inflows since April 2000 to December 2010, standing at US$ 26.2 billion as at the end of Foreign Direct Investments in Northern Region viz-a-viz All India S. No. RBI s Regional Office 1 New Delhi 2 Chandigarh State covered (Apr-Mar) Delhi, part of UP and Haryana Chandigarh, Punjab, Haryana, Himachal Pradesh 3 Jaipur Rajasthan 4 Kanpur 5 All India Total Uttar Pradesh, Uttarakhand 7,943 (1,868) - 1,656 (343) - 1,23,025 (27,331) (Apr-Mar) 46,197 (9,695) 1,038 (224) 149 (31) 227 (48) 1,23,120 (25,834) (Apr-Dec) 9,846 (2,160) 1,384 (304) 201 (44) 444 (97) 73,177 (16,039) Cumulative Inflows (Apr 00 Dec 10) 1,11,352 (24,571) 4,176 (912) 2,421 (514) 742 (162) 5,65,380 (126,329) Note: Figures in bracket are in US$ million FEDAI conversion rate from rupees to US$ applied, on the basis of monthly average rate provided by RBI (DEAP), Mumbai. Source: DIPP, Ministry of Commerce & Industry, Government of India %age to total Inflows During , the Delhi NCR region, covering parts of Uttar Pradesh and Haryana, had a share of 37.5% in the total FDI inflows to India. Investment Climate - A Report on Northern States of India 100

105 Observations and Conclusions Northern region lags behind both in domestic and FDI investments. Over the last three years a mere 5% of the investments in IEMs filed have been in the northern states. However the percentage is much better in terms of number of IEMs, at 22.5% in This also indicates that relatively smaller projects are being proposed in the northern states. The track record in terms of implementation is also better, with northern states receiving 16.6% of the investments in IEMs implemented in However given the expanse of the Northern region, this number is low. Disclaimer The information presented in this document has been prepared by CII. This paper aims to provide information to the user and care has been taken to make the information as accurate as possible. However, CII does not make any representation or warranty regarding the accuracy or completeness of the information and expressly disclaims any and all liabilities based on such information. 101 Investment Climate - A Report on Northern States of India

106